The strike had begun early on Thursday as the main industry body flagged low profit margins, exacerbated by the government's move to raise taxes and boost revenue under its agreements with the International Monetary Fund (IMF).
"The talks between the Govt and petroleum dealers association has led to the strike being called off," said Energy Minister Hammad Azhar in a statement posted on Twitter.
The minister said in a statement that under the agreement with the petroleum dealers, the government would allow an increase in profit margins, initially beginning with around 1 Pakistani rupee ($0.0057) per litre and in six months moving to a system that would allow profit margins of up to 4.4%.
The government has been grappling with high inflation that is particularly hitting the country's poor and middle classes and conditions under a financing facility agreement with the IMF to lift government revenues by increasing levies.
Pakistan's gas station association has said profit margins have already dropped over the last few months as the government previously increased the petroleum levy.
With fuel prices rising several times this year, Pakistan will be continuing to add around 5 Pakistani rupees to petrol prices every month as part of the petroleum levy under the IMF's condition until it touches 30 Pakistani rupee hike.
($1 = 175.1100 Pakistani rupees)
(Reporting by Asif Shahzad and Charlotte Greenfield; Editing by Shailesh Kuber)