An eyewitness said he had seen a man dressed in police uniform, who it is believed may have been the bomber, enter the mosque as worshippers recited the Koran. He said the security forces at the shrine had tried and failed to stop him.
Pakistan's Information Minister, Sheikh Rashid Ahmed, who was at the scene, stressed that the cause of the explosion was not yet certain, but he blamed the attack on sectarian intolerance.
"This happened because of a conflict between two religious groups," Ahmed said. "At first, people here thought it was a suicide bomb, but now it's thought it might also have been a remote-controlled bomb. The experts will decide on that. All the wounded are being taken to the hospitals."
Bari Imam is near Pakistan's main government buildings and Islamabad's diplomatic quarter and just one kilometer from the official residence of Pakistani prime minister. Police said many people had died and dozens were wounded.
The motive for the attack is not yet clear, but Pakistan has been plagued by a spate of suicide bombings in recent years -- the most recent of which was in March, when 30 people died in an explosion at another Muslim shrine in the south of the country.
The problem has become so acute that, earlier this month, 58 leading Islamic scholars in Pakistan issued a decree, representing all schools of Islamic thought, forbidding suicide attacks if carried out in a Muslim country.
Most Pakistanis are Sunni Muslims, but there is a significant Shi'ite minority. The decree was an attempt to prevent sectarian attacks on places of worship.
What makes the popular Bari Imam shrine unusual is that it is visited by both Shi'ites and Sunnis and is seen as a symbol of harmony between the two communities.
Sectarian or not, hundreds of Shi'ite worshippers gathered after the attack to chant anti-American slogans.
Under the leadership of President Pervez Musharraf, Pakistan has become a key ally of the United States in its war on terror. Pakistani security forces earlier in May arrested Libyan Al-Qaeda suspect Abu Farraj al-Libbi. Not only is al-Libbi thought to be the No. 3 man the ranks of Al-Qaeda, he is also wanted in Pakistan in connection with an attempt on Musharraf's life in December 2003, in which 17 people died.
Pakistan has arrested hundreds of Al-Qaeda suspects and is conducting intensive military operations against the Taliban in its northwestern border area with Afghanistan.