The attack took place late in the night when a religious gathering of about 75 to 80 people was being held in the Imambargah in Majeed colony, Landhi area, police said.
Unidentified assailants on motorcycles threw the hand grenade inside the mosque.
Three people had died in the attack and about 16 were injured, senior police official Nasir Aftab said.
Aftab, who is SSP Malir, said that condition of some of the injured was critical.
"The bomb disposal squad is trying to find out the intensity and exact nature of the blast but according to eye witness accounts it was a grenade attack," he said.
Many police officials were immediately suspended after the attack for their negligence in providing proper security for the religious gathering at the Imambargah.
In the past, sectarian violence at imambargahs of Shia muslims, a minority in Pakistan, has taken place.
Also today, seven people were injured in a grenade attack in Quetta. The attack took place on Saryab road.
"The injured included one security official and six civilians," a senior official said.
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