In an execution-style drive-by shooting, two motorcycle- borne gunmen fired at the car of Federal Investigation Agency prosecutor Chaudhry Zulfizar Ali.
The attack occurred shortly after Ali left his house in Sector G-9 to go to Rawalpindi for a hearing of the Bhutto assassination case, in which ex-military ruler Pervez Musharraf is a "proclaimed offender", in an anti-terrorism court.
Ali, who was driving, was hit by several bullets and lost control of the car near the busy commercial area of Karachi Company at 7.30 am. The vehicle hit a woman crossing the road and she too died later in hospital.
Ali's bodyguard, paramilitary trooper Farman Ali, was injured in the attack.
Witnesses said the car was hit by almost 30 bullets.
Ali and his bodyguard were taken to the state-run Pakistan Institute of Medical Sciences.
Doctors said Ali died before reaching the hospital. They said Ali was hit by about nine bullets, including one that struck the brain, while the bodyguard was hit by only one bullet.
The gunmen escaped after the brazen shooting.
No group claimed responsibility for the attack Alis son Chaudhry Nisar and some of his colleagues told the media that the prosecutor had been receiving threats for some time.
Some colleagues said Ali had received threats from a banned extremist group.
They said he had continued pursing high-profile terrorism cases despite the threats.
Footage on television showed that several bullets had pierced the windscreen and left side of Ali's car.
There was blood on the car's seats and on the road.
Police cordoned off the spot and gathered evidence.
Ali's diary and several files related to the Bhutto assassination case were found in the car. .
The prosecutor was gunned down at a time when there have been important developments in both the Mumbai attacks case and Bhutto assassination case.
On April 13, a witness from Karachi identified Shahid Jamil Riaz, one of the accused in the Mumbai attacks case, as the person who had bought inflatable boats used by the terrorists who assaulted India's financial hub in November 2008.
Several Lashkar-e-Taiba activists, including operations commander Zakiur Rehman Lakhvi, are among the seven suspects being tried for their role in planning and financing the attacks.
The Jamaat-ud-Dawah, declared a front for the LeT by the UN Security Council, has a large centre located a short distance from the spot where Ali was attacked.
The Federal Investigation Agency recently began interrogating Musharraf over the assassination of Bhutto.
Musharraf was formally arrested by the FIA on charges of failing to provide adequate security to Bhutto, who was killed by a suicide bomber in Rawalpindi in December 2007.
Musharraf's government blamed the killing on Tehrik-e-Taliban Pakistan (TTP) chief Baitullah Mehsud, who was killed in a US drone attack in 2009.
However, Ali told reporters earlier this week that the FIA had gathered "solid evidence" that connected Musharraf "with the commission of the offences with which he has been charged".
Following Ali's killing, the hearing of the Bhutto assassination case was adjourned till May 14.
Lawyers observed a strike in courts in Rawalpindi.
President Asif Ali Zardari strongly condemned the murder and directed authorities to conduct a thorough investigation to expose those involved in the killing of Ali.