The medium-range missile, which can hit targets at a distance of 1,300 kilometers (800 miles), was launched to mark the end of military exercises being held at an undisclosed location, an army statement said.
Although the country frequently tests different versions of its missiles, the announcement comes a day after longtime nuclear rivals Pakistan and India concluded a crucial round of peace talks in New Delhi aimed at resolving their differences, including the thorny issue of their territorial dispute over Kashmir.
At their two-day talks, the two nations also agreed for the first time on joint measures to combat terrorism, and on safeguards to prevent an accidental nuclear conflict.
On Thursday, Indian External Affairs Ministry spokesman Navtej Sarna offered no comment on Pakistan's missile test.
However, G. Parthasarthy, a former Indian High Commissioner to Pakistan, said Pakistan was welcome to test whatever missiles it wants.
"We all know that these are either of Chinese or North Korean origin. Perhaps, it's a symbol of welcome to Chinese President Hu Jintao's visit to the region next week. It won't affect India-Pakistan relations."
Hu will visit both countries this month.
In Islamabad, analyst Khaled Mahmood said the test was probably meant as a message to domestic hard-liners who claim that President Gen. Pervez Musharraf's government was "unilaterally giving concessions to India."
"It is obviously a show of power as the missile test came a day after the two sides held talks," he said, adding that Pakistan was also sending a signal to India that it would "not compromise on its defense."
The military statement said Prime Minister Shaukat Aziz had witnessed the launch and congratulated scientists, engineers and the army for developing the new version of the missile.
"Pakistan can be justifiably proud of its defense capability and the reliability of its nuclear deterrence," he said, according to the statement.
Pakistan believes in peace that "comes from a position of strength and operational readiness," Aziz said.
He said Pakistan's nuclear capability had matured and has been consolidated to full operational capability in the past seven years.
Pakistan and India have fought three wars after gaining independence from Britain in 1947, reports AP.
They conducted nuclear test explosions in 1998, and often carry out tit-for-tat tests of missiles capable of reaching deep inside each other's territories.
In March 2005, Pakistan test fired its longest range nuclear-capable missile, the Shaheen II, which can travel over 2,000 kilometers (1,250 miles).
India test-fired its nuclear-capable Agni III missile, with a range of 3,000 kilometers (1,865 miles), in July 2006.