Pakistan's government has recalled its ambassador to Iran and has blocked Tehran's envoy from returning.
It comes after Iran admitted to carrying out a missile and drone attack on western Pakistan on Tuesday.
Officials in Islamabad said two children were killed and three others injured in the attack in Balochistan.
Iran's foreign minister said the operation targeted the militant group Jaish al-Adli, which he described as an "Iranian terrorist group" in Pakistan.
Islamabad said the attack was "illegal" and warned of "serious consequences".