The violence was sparked by claims that two Christian men had torn pages from a copy of the Qu’ran.
More than 120 people have been arrested in connection with the incident and police were guarding the Christian neighbourhood on Thursday.
"Children, women and old people were running. Some were running barefoot and some fled in rickshaws. There was chaos everywhere," Pastor Javed Bhatti said.
At least four churches and a dozen houses and shops were burned and ransacked, their broken contents strewn across the streets, according to journalists at the scene.
Locals said hundreds of people have fled the area to stay with relatives and have yet to return out of caution. The situation reportedly remains tense in the city.
Pakistan's Christian community rallied in nearby Lahore on Thursday to condemn the attacks on churches. Christians make up around two per cent of the population.
