Junior interior minister Talal Chaudhry said Iqbal was hit by a bullet in his arm in the attack in Narowal district, his constituency in central Punjab province.
"The minister luckily survived. Thank God he is out of danger," Chaudhry said.
The attacker was arrested immediately after the shooting, officials said.
Iqbal, a senior member of the ruling Pakistan Muslim League-Nawaz (PML-N) party and a staunch ally of ousted premier Nawaz Sharif, is one of the most senior figures in government and PML-N.
Pakistan’s Prime Minister Shahid Khaqan Abbasi "strongly condemned" the attack on Iqbal and called for an immediate report into the incident by the chief of police in the vast Punjab province.
A senior government source said early information suggested Iqbal was returning from a meeting with a Christian group, though in his constituency there are other minority groups.
"We are not sure whether it has got anything to do with the motive. We will know only after investigation of the attacker," said the government official.
Militant attacks in Pakistan have fallen sharply over the past few years, but Islamist militants continue to pose a threat and carry out assassinations.
In the past politically motivated attacks have also been a feature of political life in Pakistan.