Thousands converge on chip-board factory and residential area owned by Ahmadi Muslims.
The violence then spread to the nearby town of Kala Gojran, where a second set of rioters ransacked the Ahmadiyya mosque Bait ul Zikr on Saturday.
The riots began when a local man falsely accused the Ahmadiyya Muslim Community of desecrating the Quran.
A mob quickly converged at a chip-board factory owned by Ahmadi Muslims and began pelting stones, then set the factory ablaze with Ahmadis still locked within.
Police helped the Ahmadis escape, but not before the mob had attacked nearby homes belonging to Ahmadi families.
The Ahmadiyya Muslim Community has faced decades of often deadly persecution in Pakistan. Last year, an elderly lady and two children were murdered in a similar incident in Gujranwala.
Ahmadis in Jhelum have previously received threats on a number of occasions.