Officials said the deaths occurred in the low-income Shahdra Town neighbourhood between Friday and Sunday, with the majority of victims being drug addicts who took the syrup to get high, according to local police station chief Atif Zulfiqar.
The scandal comes after around 100 heart patients died in January in Lahore, Pakistan's second largest city, after taking faulty medicine made locally.
"At least 16 people, mostly drug addicts, have died after taking the toxic syrup," Mr Zulfiqar said.
"Some of the victims were found dead in a graveyard where addicts used to take different kinds of drugs."
Seven others died in hospital.
Three pharmacies have been shut down and their owners arrested, he said.
The health adviser for Punjab province, Khawaja Salman Rafiq, said the syrup would be confiscated from all pharmacies.
He said inspectors had shut down a drugs factory and sent samples to a laboratory for detailed analysis.
"Punjab chief minister Shahbaz Sharif has ordered an inquiry and a report will be submitted to him within 72 hours," Mr Rafiq said.
Doctor at Lahore's Mayo Hospital, Tahir Khalil, said 20 victims aged 15 to 45 had been admitted after drinking the syrup and most had a history of addiction.
"One of the victims who was in critical condition died today and the total deaths in hospital are seven," Dr Khalil said.
"Six people were saved and were discharged after treatment, while seven others were still admitted to hospital."