The announcement was made in the Supreme Court as thousands of people protested in the capital Islamabad, demanding the immediate dissolution of parliament on the third day of a mass march led by an influential cleric.
"The chief justice ordered that all concerned, regardless of their rank, who have been booked in the case be arrested and if someone leaves the country, then chairman of NAB (anti-corruption watchdog) will be held responsible along with his investigating team," lawyer Aamir Abbas told AFP.
"The sixteen include Raja Ashraf," said Abbas, referring to Prime Minister Raja Pervez Ashraf. He said Ashraf had not been referred to by name by Chief Justice Iftikhar Muhammad Chaudhry.
Protesters camped out near parliament broke into spontaneous applause as news of the arrest orders filtered through.
Ashraf took office in June last year after the Supreme Court dismissed his predecessor, prime minister Yousuf Raza Gilani, for contempt after he refused to ask Swiss authorities to reopen corruption cases against the president.
Abbas, who represents NAB, said the defendants had been ordered to appear before the Supreme Court on Thursday.
In Pakistan's financial capital, the Karachi Stock Exchange fell sharply as reports of the order flashed across local television news channels.
The KSE 100 index lost 453.46 points, or 2.74 percent, in little over half an hour, to stand at 16,633.18 just before 3:00 pm (1000 GMT) -- 559.74 points down on opening.
Earlier on Tuesday, the chief justice said general elections, which are due to be held by mid-May, must be held on time. He was talking in a separate case related to the election commission.
"The court will not compromise on this," Chaudhry said. "The Election Commission should be ready for elections as soon as the federal government or Prime Minister asks for it."
The Muslim preacher Tahir-ul Qadri, who is leading the protest to disband parliament, has demanded that a caretaker government be set up in consultation with the military and the judiciary, and for key reforms to be implemented before elections are held.
His demands are seen by critics as a ploy by elements of the establishment, particularly the armed forces, to delay the elections and sow political chaos in a country that was ruled by the military for decades.
SC orders arrest of Prime Minister: lawyer. Reviewed by Sarah Peracha on 6:43:00 AM Rating: