Interior Minister Rehman Malik said Monday's attack was carried out by a suicide bomber who detonated his explosives at the start of the procession.
Live television footage showed the blast and smoke billowing from the scene. Ambulances rushed to and from the area.
"So far, there have been 20 deaths reported in Civil Hospital. Around 60 more are wounded. Many of them are in critical condition," said Provincial Health Minister Sagheer Ahmad, adding the death toll could increase.
Violence broke out in the aftermath of the bombing, with outraged Shiites at the procession firing shots in the air, said police officer Raja Umer Khatab. An Associated Press reporter at the scene said others used stones to pelt police and paramilitary forces, who had been guarding the march, in anger over the blast.
Television footage showed police cars and ambulances damaged, with windows smashed and doors and hoods ripped open.
Karachi Mayor Mustafa Kamal called for calm.
"I want to appeal to the people, to my brothers, my elders to stay calm. I am hearing people are clashing with police and doctors. Please do not do that. That is what terrorists are aiming at. They want to see this city again on fire," he said.
Security has been tightened across Pakistan for Ashoura, which is the 10th day of the holy month of Muharram, a month of mourning commemorating the seventh-century death of the Prophet Muhammad's grandson. Muharram has often been marred by bombings and fighting between Pakistan's Sunni Muslim majority and its Shiite minority. Some parts of the Muslim world celebrated Ashoura on Sunday.
