Scores of security personnel, including troopers from the Pakistan Rangers and Frontier Corps, were deployed to bring the situation under control after the prisoners broke out of their barracks and took 15 staff, including the assistant jailer, hostage.
One prisoner was killed and six more were injured when the security forces opened fire, officials said.
Some reports said two prisoners were killed.
Deputy Inspector General (Prisons) Gulzar Channa told the media that several high-profile prisoners, including some arrested for involvement in the abduction and murder of American reporter Daniel Pearl, were being held at Hyderabad Central Jail.
Channa said prompt action was taken by authorities to prevent a jailbreak by these high-profile prisoners.
Prison guards used teargas and fired in the air to disperse prisoners who tried to break down a wall and a gate.
Several policemen were also injured, officials said.
Terror mastermind Ahmed Omar Saeed Sheikh, arrested for masterminding the murder of Daniel Pearl, too was being held at the Hyderabad jail but some reports said he had been moved out of the facility.
The prisoners were reportedly protesting against the lack of amenities at the jail.
Footage on television showed the prisoners vandalising property within the jail and standing in large numbers on the roofs of structures within the walled complex.
Channa acknowledged that 1,000 of the 1,800 prisoners in the jail were terrorists or hardened criminals.
He said some of the most dangerous prisoners of Sindh province were being held at the jail.
He said he had not received any complaints from the prisoners during his last visit to the jail.
The prisoners had been demanding facilities such as provision of mobile phones, which could not be made available to them, he said.
In March last year, seven prisoners were killed and over 20 injured in a clash between police and prisoners at the same jail.
