The blast occurred in the remote Hub region in Khuzdar district of the province while devotees were participating in a Sufi dance called "dhamaal" at Dargah Shah Noorani.
At least 45 people were killed and more than 100 have been injured in the blast, rescue officials said.
While confirming the death toll, Balochistan Home Minister Sarfaraz Bugti said ambulances and rescue teams had rushed to site.
The blast happened when about 500 to 600 devotees were present at shrine.
Islamic State group claimed responsibility for the attack via Amaq news agency.
"35 dead and 95 wounded Shiite visitors in...Operation attack by the Islamic State fighter that targeted a shrine in a city in Balochistan," the agency said.
The Express Tribune quoted police sources as saying that the blast was a suicide attack carried out by a 14-year-old boy. No group has claimed responsibility for the attack.
The death toll is feared to rise and women and children were among those killed in the blast.
"The shrine is located some 250 kilometres from Karachi in the remote mountains of Uthal and our vehicles have been dispatched there to carry out rescue operations and shift the injured to the hospitals," said Hakeen Lassi, an official of the Edhi Trust Foundation.
Local tehsildar Javed Iqbal said security arrangements at the shrine were not proper.
He said the devotees take part in the 'dhamaal' everyday after sunset and the blast took place close to where they were dancing inside the compound of the shrine.
President Mamnoon Hussain and Prime Minister Nawaz Sharif strongly condemned the bomb blast. They directed the concerned authorities to speed up the rescue activities and provide best medical facilities to the injured.
This is not the first time that extremists have targeted a shrine in Balochistan. This is the third major incident of a bombing in the province since August.
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