"Prime Minister Mir Hazar Khan Khoso has decided to release 51 Indian fishermen on humanitarian grounds as a gesture of goodwill. These prisoners have already served their sentences," said a statement from the caretaker premier's office.
Khoso expressed the hope that the Indian government would reciprocate by freeing Pakistani prisoners.
The statement did not say when the prisoners would be repatriated.
The decision to release the fishermen was made at a meeting attended by interim Law Minister Ahmer Bilal Soofi, caretaker Sindh Chief Minister Zahid Qurban Alvi and senior officials of the Interior, Foreign and Law Ministries and the Prime Minister's Secretariat.
Khoso was informed that 482 Indian prisoners are currently in Pakistani jails while 496 Pakistanis are in Indian jails.
He was also told that the Pakistan government was "awaiting the confirmation of national status of other Indian prisoners".
The premier directed the Foreign Ministry to initiate dialogue with India for the release of Pakistani prisoners as well as the return of Indian prisoners.
The move to release the prisoners came a little over a fortnight after Indian death row prisoner Sarabjit Singh died in Lahore on May 2 following a brutal assault within Kot Lakhpat Jail.
Following his death, Pakistani prisoner Sanaullah Ranjay was assaulted in a jail in Jammu and died later in a hospital in Chandigarh.
The deaths affected relations between Islamabad and Delhi.
Earlier this year, ties had hit a low following a string of violations of the ceasefire along the Line of Control in Jammu and Kashmir.
India said two of its soldiers were killed and one of them was beheaded.
PML-N chief Nawaz Sharif, set to become the new Prime Minister following his party's victory in the May 11 polls, has said he intends to boost the bilateral peace process.