The engine of Shalimar Express train derailed on Saturday night as the rail track was blown off by explosives near Sadiqabad in Chandrami area.
Three-foot track was blown off by the explosion and a crater of five feet formed on the rail track after the blast. The train was bound for Karachi from Lahore.
The track was blown by unknown assailants using a remote control device and was targeted when the train was passing. The device has been recovered from the blast area.
A heavy contingent of police surrounded the city and has started a search operation.
The railway traffic was restored on both up and down tracks on Sunday more than nine hours after the blast.
Trains from Lahore to Karachi and Karachi to Lahore started operating on the track that was repaired by railway authorities following the late night blast.
Police said the blast slightly damaged the engine, with no casualties reported.