The bomber entered the shrine through its Golden gate and blew himself up near the site where the ritual of Sufi dance 'Dhamal' was taking place.
The attacker first threw couple of grenades to cause panic and then blew himself up, police said. Hundreds of devotees were present inside the premises of the vast mausoleum of the saint in the Sehwan town, some 200 kms northeast of Karachi, at the time of blast.
"We had around 27 policemen on duty at the shrine and they were CCTV cameras also. But he took advantage of the rush. I don't think this is a security lapse," Inspector-General of police in Sindh, AD Khawaja said.
DIG police Hyderabad range, Manzoor Rind told media that the death toll from the suicide bombing has climbed to 76 while the injured were around 250.
"The toll at this moment is 76 but condition of some of the injured admitted in different hospitals is critical," Rind said.
Earlier, Sehwan police station SHO Rasool Baksh told reporters that around 100 people, including women and children, have been killed in the suicide bomb attack.
The ISIS claimed responsibility for the attack on their Aamaq news agency, saying a suicide bomber had targeted a "Shiite gathering" at the shrine in Sindh.
Commissioner Hyderabad Qazi Shahid Pervaz said since the shrine was located in a remote area, some 130 kms from Hyderabad, ambulances and vehicles and medical teams were sent from Hyderabad, Jamshoro, Moro, Dadu and Nawabshah to the blast site to take care of the injured and move the bodies.
He said the shrine has been sealed and police have collected initial evidence and secured CCTV footage. "The forensic examination will be carried out at the shrine soon," he said.
Qazi said rescue operations have been completed as the Pakistan Army and Navy had sent three night flying helicopters and ambulances to shift the dead and injured.
He said the dead bodies are now being identified.
This is the fifth major terrorist strike in Pakistan within a week's time.
Prime Minister Nawaz Sharif condemned the attack and urged Pakistan to "stand united".
He said the attack on the shrine is an attack on the "progressive and inclusive future" of Pakistan.
"The Sufi people predate Pakistan's history, and played an important part in the struggle for its formation," he said.
"An attack on them is a direct threat to Jinnah's Pakistan and will be dealt as such," Sharif said.
Army chief Gen Qamar Javed Bajwa vowed to avenge "every drop of blood" spilled by terrorists in Pakistan.
"Recent terrorist acts are being executed on directions from hostile powers and from sanctuaries in Afghanistan. We shall defend and respond.
"Each drop of the nation's blood shall be revenged, and revenged immediately. No more restraint for anyone," the Army Chief was quoted as saying by Inter Services Public Relations (ISPR) Director Major General Asif Ghafoor on Twitter.
Devotees gather at the shrine of Lal Shahbaz Qalandar, a Sufi philosopher-poet of present-day Afghanistan and Pakistan, every Thursday to participate in a dhamaal and prayers.