Rescuers are still battling to reach the dead and injured inside, more than 24 hours after the inferno began.
Hundreds were trapped inside - the building had metal grilles on the windows and no fire exits. Many workers jumped from the upper floors.
The fire began hours after a blaze at a Lahore shoe factory killed 25 people, highlighting lax safety regulations.
Investigations have been announced into both fires. Reports say they may have been caused by faulty generators.
Some 40 firefighting vehicles tackled the Karachi blaze, officials said.
People trapped inside the building frantically rang their friends and relatives as flames engulfed it, reports say.
The Ali Enterprises factory in the Baldia town area of Karachi was mobbed by shouting and sobbing relatives as rescuers pulled out body after body.
"The death toll is 289. This is not final - the search for more bodies continues," the city's top official, Roshan Shaikh, told AFP news agency, in the afternoon.
By Syed Shoaib HasanBBC News, Karachi
It is not just textile mills - industries across Pakistan are increasingly prone to disaster. Sometimes it is the collapse of poorly constructed premises - but fires remain the main danger.
In general, the problem is the same that plagues all matters of governance in Pakistan - enforcement of the law. Industrial standards are disregarded to minimise cost as inspectors are paid to look the other way.
Textile factories are particularly at risk because of the lethal combination of chemical dyes and stacks of cotton often stored next to each other  - ensuring a deadly result.
Fire exits - as in the case of the factory in Karachi - exist only on paper, a factor in raising casualty figures. The city administration itself has a limited number of fire engines to serve the growing needs of an increasingly sprawling metropolis.
What is generally a small and controllable mistake is made worse by years of official disregard for workers' safety. That in turn produces such tragedies - which are then covered up, only to be repeated a few months later.
Workers had little time or opportunity to escape from the four-storey building's single exit - many could do so only by jumping from the windows. Dozens suffered broken bones, or worse.
One survivor, Allah Warayo, said there was a stampede as the fire spread. He ended up jumping from the third floor, but five members of his family did not escape.
"We started running towards the exit. There were 150-200 people all running and pushing each other. I fell down unconscious," he told BBC Urdu's Riaz Sohail.
"Then I managed to get some air from a vent. I started screaming. A crane made a hole in the wall and I was able to jump. I begged the rescue workers to help my relatives, but no-one paid any attention."
Mr Warayo told the BBC people had tried to break the metal grilles but could not. He said the door to the back stairs leading to the roof was also locked.
He screamed to the guards below to throw the keys to him, but they did not listen, he said.
Firefighters on crane lifts battled to rescue other trapped survivors suffering from burns and smoke inhalation, but the death toll rose steadily over the day as the horror of the blaze, which raged for 15 hours overnight, unfolded.
In pictures: Deadly Karachi fire
Karachi fire chief Ehtesham Salim said: "We found people who died because of suffocation caused by the highly toxic smoke. They died first and then their bodies were burned by the raging fire."
Many bodies were charred beyond recognition. Officials said the factory was crammed with combustible materials, including piles of clothes and chemicals.
The cause of the blaze was still being investigated, police said, but workers believe it may have been caused by a faulty generator.
Garments factories across Pakistan require their own power sources because of an increasingly erratic national grid.
The industry is critical to Pakistan's frail economy - according to central bank data, it provided 7.4% of Pakistan's GDP in 2011 and employed 38% of the manufacturing  sector workforce, accounting for 55.6% of total exports.
At least 289 people have died in one of Pakistan's worst fires, at a garment factory in Karachi, officials say.