The seizure is the largest since May last year when the authorities seized 375 kilograms of the drug.
The authorities examined a refrigerated container at Karachi port and found bags of heroin concealed by solution tape and balloons.
"All 5,400 bags were de-stuffed and thoroughly examined and we found 830 pouches each weighing between 145 grams to 155 grams. The total weight of heroin was 125 kilograms," Babar Ali Shah, a customs official told reporters.
"We have arrested the clearing agent and one of his employees," Shah said.
Officials said the heroin was smuggled from neighbouring Afghanistan through Khyber-Pakhtunkhwa.
"This is the second biggest heroin seizure in the history of Pakistan," another customs official Qamar Thalho said, putting the value of the stash at $0.55 million on the local market and $13.75 million on the international market.
He said the narcotic hidden in a container was booked for Malaysia.
Pakistan has more than four million drug addicts in a population of nearly 180 million, according to figures compiled by the ANF, which is responsible for investigating and prosecuting drug offences.
Opium poppy is grown on the Pakistan-Afghanistan border.
Pakistan has a 2,500-kilometre porous border with Afghanistan, which supplies 90% of the world's opium used to make heroin.
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