Peaceful anti-government demonstrations spilled over into deadly confrontation overnight after thousands of protesters tried to storm Sharif's residence. Police responded with teargas and rubber bullets. At least three people were killed and 200 wounded, hospital officials said.
Activists demanding Sharif's resignation have camped outside government offices for more than two weeks but it was the first time violence broke out as protesters, some armed with sticks and wearing gas masks, tried to break through police lines.
Army chiefs held an emergency meeting in the garrison city of Rawalpindi on Sunday night (local time) to discuss the crisis, prompting speculation that the military could take decisive action to end the crisis in a democracy where power has usually changed hands via coups rather than elections.
Small skirmishes continued into Sunday (local time), with police occasionally firing teargas. The atmosphere remained tense, with thousands of people still massing outside parliament. Smaller protests were also reported in the city of Lahore, Sharif's power base.
Khan, a renowned cricketer before entering politics, called on more protesters to join him and to prepare for a second night of trouble.
"I am prepared to die here. I have learnt that government plans a major crackdown against us tonight," he said. "I am here till my last breath."
Khan told the cheering crowd to challenge security forces protecting the parliament and the prime minister's house.
"The way you stood up last night, you have to stand up today also," he said. "We will face them and make them run away this time."
How the crisis ends ultimately lies in the military's hands in a country ruled by generals for half of its entire history.
Sharif, who swept to office last year in Pakistan's first democratic transition of power, has resisted calls to resign while agreeing to meet other demands such as an investigation into suspicions of fraud during last year's election.
His office reiterated on Sunday evening that his resignation was out of the question and called on all sides to find a negotiated and peaceful solution to the standoff.
"It was agreed that this undemocratic onslaught should be withdrawn and parties should come back to the negotiation table," his press office said in a statement after Sharif chaired a meeting with his top officials.
Ousted from an earlier stint in office in a coup in 1999, Sharif still has a difficult relationship with the army. Even if he survives this crisis, he will remain significantly weakened and sidelined on key issues such as foreign policy and security.
Another opposition leader, cleric Tahir ul-Qadri, who has rallied thousands of his own supporters alongside those of Imran Khan, said protests would not subside unless Sharif resigned.
"State atrocities have reached their peak," he told his supporters, standing on top of a shipping container. "Imran khan and Dr. Qadri are fighting this war together."