The 15 August lynchings were captured on video and have outraged Pakistanis.
In the footage the youths protest their innocence as they are beaten with sticks and wires by a group of men before being strung up on metal poles.
Police officers and other on-lookers did nothing. Officials say the mob mistook the brothers for robbers.
The BBC's Syed Shoaib Hasan in Islamabad says it is clear from the footage that the two brothers - Mughees Butt, 19, and Muneeb Butt, 15 - were alive as they were hung from the poles.
At one point, the screaming youths ask to be shot so their ordeal might end.
Local police officials have been suspended while the investigation is held.
Our correspondent says the lynching has raised more questions about the government at a time when its popularity has plummeted to new depths, following accusations it was slow to respond to floods that have caused havoc across Pakistan.
Mob justice has been quite the norm, in Sindh, in Punjab and elsewhere in the country. The killings in Sialkot are a reminder that these murderers are getting more brutal, more dehumanised with each incident. The causes behind the madness that led to the lynching are still being probed. What is clear, however, is that the police were involved. Video footage of the incident shows policemen who seem to be part of the mob. The Supreme Court has taken notice of the double murder. The SHO ‘concerned’ has been arrested and a case registered against 14 people. The IG Punjab has suspended a few policemen in Sialkot and Chief Minister Shahbaz Sharif has also woken up to the situation. As he castigated the police the chief justice remarked: “What message have you given to the world about Pakistan?” One could say, with due respect to the judiciary, that the act would have been bad enough had it remained hidden from an international audience.
The agents who promote such despicable acts of violence must be identified. Those in the media must introspect and see how much they have contributed to the sense of desperation found among Pakistani citizens today, while the police must be taken to task along with rulers who encourage the law-enforcers and the general public to play judge and executioner. The very day newspapers reported the Sialkot double-murder, they also carried a news item about the awarding of the Tamgha-i-Imtiaz to the DIG Gujranwala, Zulfiqar Cheema, for “maintaining law and order”. The police officer, in whose jurisdiction Sialkot also falls, appears to do his job in a manner that is condemnable. There are serious allegations that under his watch people have been killed in encounters and their bodies paraded through the streets. When the state rewards such actions, it is actively creating conditions for incidents such as the one that took place in Sialkot. The state is no less guilty than the SHO who has been booked.
The suspension of the DPO was recommended by the Punjab chief minister in a telephonic conversation with the prime minister on Sunday evening. Shahbaz Sharif, accompanied by Pakistan Muslim League-N Quaid Nawaz Sharif, Sunday visited the bereaved family and later addressed a press conference at the residence of MNA Khwaja Muhammad Asif in Sialkot Cantt.
He said Additional Inspector General CID Punjab Mushtaq Sukhera would head a five-member joint enquiry committee, which would complete the investigation process within a week. He said the Inspector General Police Punjab had been directed to arrest all the accused including the police officials and onlookers within three days.
He said after the inquiry completion, the FIR against the police officials would be changed. Shahbaz also ordered the arrest of former Sialkot DPO. He said an anti-terrorist court would hear the case on daily-basis and the decision would come in days or weeks, and not in months or years. He appreciated the role of print and electronic media in highlighting the barbaric incident.
Nawaz Sharif said on the occasion that the killings were a barbaric incident and everyone present there, including the police officials, were responsible for it and they would be brought to justice.
Nawaz said the police, district administration and ordinary citizens had briefed him about the sad incident and revealed that both the brothers belonged to a gentle, noble and well-off business family, and they had no previous criminal record of any kind.
Punjab Governor Salmaan Taseer also visited the family of the murdered boys - Hafiz Mughees and Muneeb Sajjad. Talking to journalists on the occasion, Taseer sought pardon from the nation over the killing of two brothers in the presence of the police and the public.
Punjab Law Minister Rana Sanaullah, meanwhile, said the culture of mass brutality was introduced by the Gujranwala police a year or so back when the bodies of alleged criminals were paraded in public.
Meanwhile, Shams Ali, one of the accused involved in the barbaric killings, claimed that he carried out the murders at the behest of DPO Waqar Chohan. He quoted the DPO as saying: “Go ahead and kill both of them. Police will claim the responsibility for the killings and declare it a police encounter.” Shams Ali told Geo News that his 12-year-old nephew also sustained injuries in the firing before the episode of torture of the brothers.
Punjab Rescue Services Director General Dr Rizwan Nasir meanwhile suspended the in-charge of Rescue 1122 office, Shaukat Ali Sajid, and his seven subordinates on the charges of helping the killers. The Rescue 1122 office is situated at Daska-Sialkot Road near village Buttar and the staff had provided the mob ropes to tie the hands and feet of the two ill-fated brothers.
On the other hand, scores of young men from Mohalla Hajipura attacked the Rescue 1122 office for allegedly helping the culprits. However, the staff fled the office and saved their lives. Police from Saddar Sialkot police station rushed to the scene and baton-charged the angry mob to disperse them.