Schools have been closed for nearly two weeks in the province, home to nearly half the country's 240 million population, as dense smog hit "hazardous" levels.
"The ambient air quality has improved in Punjab, due to rain in upper parts of Punjab, change in wind direction and speed," the province's environmental agency said late Tuesday.
"Therefore, all the educational institutions in the whole province, including Lahore and Multan Division, shall be opened" beginning Wednesday morning, it said.
Students and staff will be required to wear face masks, it added, while also ordering a "complete ban on outdoor sports and outdoor co-curricular activities till further orders".
Breathing toxic air has catastrophic health consequences, with the World Health Organization (WHO) warning that strokes, heart disease, lung cancer and respiratory diseases can be triggered by prolonged exposure.
Since Sunday, the Air Quality Index has fallen below 300, the threshold considered "hazardous" for humans. Last week, the index hit a record high of 1,110.
But as of Tuesday evening, the concentration of PM2.5 micro-particle pollutants in Lahore was still more than ten times higher than levels deemed acceptable by the WHO.
A mix of low-grade fuel emissions from factories and vehicles, exacerbated by seasonal crop burn-off by farmers, blanket the city each winter, trapped by cooler temperatures and slow-moving winds.
According to a University of Chicago study, high levels of pollution have already reduced life expectancy in Lahore, the capital of Punjab with its 14 million inhabitants, by 7.5 years.
Similar hazardous conditions have hit India's capital New Delhi, where classes have been moved online after air pollution surged past 60 times the WHO-recommended daily maximum.
Experts believe that modernising car fleets, reviewing farming methods and making the transition to renewable energies are the keys to overcoming the smog that paralyzes millions of Pakistanis and Indians every year.
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