Constable Asad Ali was unhappy with his sister Najma Bibi, 22, for wearing what he considered were "men's clothes", especially jeans, officials said.
The siblings often quarrelled over the issue and Ali allegedly shot and killed his sister on Friday.
A few days ago, Ali had warned his sister that he would kill her if she did not stop wearing jeans and trousers.
Subsequently, Najma filed a complaint against her brother at the police station in the residential neighbourhood of Shahdara and sought protection. However, the police took no action against Ali.
According to the FIR filed after the crime, Ali followed Najma when she left the house yesterday and allegedly fired at her near Shahdara Morr, killing her instantly.
Ali managed to escape and the police are conducting raids to nab him, officials said.