Police had cordoned off the area on Mall Road, one of the city's main arteries, as witnesses fled amid fears of a second blast.
Police had cordoned off the area on Mall Road, one of the city's main arteries, as witnesses fled amid fears of a second blast, with images of the injured being carried away shown by local media.
Rescue official Deeba Shahnaz said at least 10 people had died in the explosion, while some 60 other wounded people had been rushed to city hospitals, in figures confirmed by hospital sources.
"The blast was so powerful. I saw the injured and bodies, saw flames surrounding the blast site, people were crying," witness Muhammad Tariq told AFP.
The incident occurred as hundreds of chemists protested a new law near the Punjab provincial assembly building, Rana Sanaullah, the provincial law minister, told AFP.
"We fear many injured," he said.
Lahore, the country's cultural capital, suffered one of Pakistan's deadliest attacks during 2016, a Taliban suicide bomb in a park on Easter that killed more than 70, including many children.
But blasts have generally been rare in the teeming city in recent years, as casualties from extremist attacks in Pakistan dropped significantly in 2015 and 2016.
No group immediately claimed Monday's explosion, but the same faction of the Pakistani Taliban responsible for the Easter blast recently vowed it would continue carrying out attacks.
Social media users were quick to suggest the blast was meant to derail plans to hold the highly-anticipated final of the Pakistan Super League in Lahore.
The second year of the Twenty20 tournament is currently being held in the United Arab Emirates out of security fears, but after a military crackdown on extremism officials were confident enough to plan for the final to take place in the cricket-mad city.