In February 1985 elections for the national and provincial assemblies were held. Political parties were not allowed to participate, but there was a high turnout, despite a boycott by the opposition. Zia chose as prime minister Muhammad Khan Junejo, a Sindhi politician who had previously served in Zia's Cabinet. Martial law was lifted in December 1985. In January 1986 Junejo announced the revival of the Pakistan Muslim League. Soon afterward, Benazir Bhutto, the daughter of Zulfikar Ali Bhutto, returned from abroad to re-form the PPP. She received an enthusiastic welcome, but her attempts to arouse popular protest met with little success.

In late 1986 Karachi, Quetta, and Hyderabad were rocked by riots between the muhajir majority and Pathans, originally from the North-West Frontier Province and Afghanistan. Ethnic violence continued through the early 1990s and spread to involve other ethnic groups and other cities in Sindh province.

A deplorable feature of the late 1980s was the increase in the manufacture, use, and export of narcotics. It was calculated that the world's major source of heroin was the Afghanistan-Pakistan borderland. Annual production of opium was said to exceed 200 tons in some years, and it was estimated that as many as one million people were addicted to heroin.

In May 1988 Zia dissolved the national and provincial assemblies and dismissed the Junejo government, alleging that it was corrupt, weak, and inept. He announced that elections would be held within 90 days, but they were later postponed to November. In June a caretaker government was set up, with Zia acting as head of government.