Officials said the launch of the Hatf-IV, also known as the Shaheen-1, would strengthen the country's deterrence capabilities "manifold".
The launch of missile was described by the military as successful.
"The missile incorporates a series of improvements in range and technical parameters of the existing missile," the military said in a statement.
The Hatf-IV is capable of carrying nuclear and conventional warheads to a range of 900 km.
The "impact point" of the launch was at sea, the statement said.
The launch was witnessed by Strategic Plans Division chief Lt Gen (retired) Khalid Ahmed Kidwai, who said the improved version of the Hatf-IV "has consolidated and strengthened Pakistan s deterrence abilities manifold".
Senior military officers, scientists and engineers were also present at the launch.
Since last year, Pakistan has tested a wide array of missiles, from the Hatf-IX tactical missile with a range of 60 km to the Hatf-V ballistic missile with a reach of 1,300 km.