Ahsan Iqbal is undergoing surgery in Lahore and expected to survive.
The suspect, who police said was named Abid and is believed to be in his early 20s, shot Mr Iqbal at close range. He has been arrested.
The politician was hit in his right arm as he was preparing to leave a public meeting in Punjab province, according to police.
“The attacker was about to fire a second shot when police and people in the meeting overpowered him,” said Malik Ahmed Khan, a spokesman for the Punjab government.
Mr Iqbal “was targeted”, his aide Asim Khan told AFP.
Video footage of his arrival released by the ruling Pakistan Muslim League-Nawaz (PML-N) showed him being lifted from a helicopter on a stretcher, his eyes open as he responded to questions.
“He’s stable…he’s ok,” said a hospital official.
The shooting in Mr Iqbal’s constituency of Narowal district comes as Pakistan prepares up for its second ever democratic transition, with federal polls widely expected this summer.
PML-N politician Maiza Hameed told Pakistan’s Geo News that the shooting was an attempt to “weaken democracy” ahead of the upcoming elections.
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Prime Minister Shahid Khaqan Abbasi, along with opposition leaders Imran Khan and Bilawal Bhutto and the powerful army chief General Qamar Javed Bajwa, have all condemned the attack.
Mr Iqbal, who was touted as a potential prime minister when Nawaz Sharif was ousted last July, was educated in the US and is from a political family long associated with the PML-N.