One of Mr Khan's bodyguards lost his balance and fell while the forklift was raising them to the makeshift stage atop an empty container.
The bodyguard then fell off the forklift, pulling Mr Khan and two more bodyguards along with him, footage on television showed.
The 60-year-old Mr Khan and his bodyguards were standing on a pile of wooden pallets that were not properly balanced.
He fell several feet to the ground.
Footage on television showed a dazed Imran Khan, blood streaming from a wound on his head, being carried to a vehicle by several supporters. (See pictures)
The cricketer-turned-politician was driven in a private vehicle from the site of the election meeting at Ghalib Market to Fazal Hospital in Liberty Market.
After a cut on Mr Khan's head was stitched up, he was taken to his Shaukat Khanum Hospital.
After several tests, including a CT scan, Mr Khan was admitted to an intensive care unit of Shaukat Khanum Hospital so that he could be monitored round the clock.
"He is perfectly alright and was laughing when I met him," caretaker Punjab Chief Minister Najam Sethi told the media after meeting Mr Khan in hospital.
"He is fine and upbeat...The doctors said he is safe and not in any danger," Mr Sethi said.
Mr Sethi said Mr Khan had suffered a "hairline fracture" of the skull while senior Pakistan Tehrik-e-Insaf leader Asad Umar said one of Mr Khan's vertebrae was fractured.
"His movements will be restricted for three weeks and he will have to wear a brace," Mr Umar told reporters.
Shaukat Khanum Hospital chief executive Faisal Sultan too said Mr Khan was out of danger.
Mr Khan would remain in the hospital for a while and would be examined again on Wednesday, he said.
Party leaders acknowledged that Mr Khan would not be able to head the party's campaign due to his injuries.
Campaigning for Pakistan's landmark general election will end on May 9, two days ahead of the polling.
A large number of Mr Khan's supporters gathered outside the Shaukat Khanum Hospital.
Fans and supporters of Mr Khan gathered at many places in Lahore and offered prayers for him.
Some workers of Mr Khan's party claimed there was a "conspiracy" behind the incident.
President Asif Ali Zardari, caretaker Prime Minister Mir Hazar Khan Khoso, PML-N chief Nawaz Sharif and Muttahida Qaumi Movement head Altaf Hussain expressed concern at the incident and prayed for Mr Khan's speedy recovery.
In a gesture of goodwill, Mr Sharif asked PML-N workers to immediately halt media advertisements against Mr Khan.
Mr Sharif also cancelled all election-related activities on Wednesday.