Doctor Fawad Mukhtar, the alleged ringleader, is accused of extracting the kidneys at least 328 people and transplanting them into rich clients.
Dr Mukhtar has previously been arrested five times for malpractice.
At least three vulnerable patients lured from hospitals died having their organs harvested in this way, authorities said.
The gang was believed to be operating across eastern Punjab province, as well as in Pakistan-administered Kashmir.
Mohsin Naqvi, the chief minister of Punjab province, said transplants were carried out in private homes often without the patient knowing.
A car mechanic is said to have worked as Mukhtar’s surgical assistant and helped lure people from hospitals.
Mr Naqvi added the kidneys were then sold for up to 10 million rupees (£99,000) each.
During a press conference on Sunday, he said: “The facts and figures that have come to us make the heart tremble.
“There are a lot more transplants and illegal surgeries than this. These are the ones that we have confirmed.”
Human organ trafficking was made illegal in Pakistan in 2010 and punishable with a maximum ten-year jail sentence.
The measures were designed to stop overseas sales, exploitative doctors and middlemen.
However, there has been a rise in organ trafficking in the country as people struggle with low wages and a poor enforcement of the law.
In January, Punjab police uncovered another organ trafficking ring after a missing 14-year-old boy was found in an underground lab with his kidney removed.