In an incident that triggered a wave of anger and disbelief across the country, Salmaan Taseer, the governor of Punjab and a close ally of President Asif Ali Zardari, was killed at a popular market in Islamabad by one of his security detail.
It is the highest-profile assassination in Pakistan since the killing three years ago of former prime minister Benazir Bhutto.
Five other people were injured as other security personnel confronted the gunman.
An urgent investigation is now under way into whether the bodyguard was acting alone when he shot dead the man he was supposed to be protecting.
The assassin reportedly later told investigators he had acted because of Mr Taseer's opposition to legislation that campaigners say is often used to persecute minorities and settle personal disputes.
The 56-year-old governor had been one of the few high-profile politicians in the country prepared to speak out against the laws and often made his liberal opinions known on Twitter.
He had most recently spoken out over a death sentence handed down by a Punjab court to a Christian woman found guilty of blasphemy, saying Asia Bibi should be pardoned.
His comments drew criticism and death threats from Muslim conservatives but Mr Taseer recently told The Independent: “It doesn't bother me. Who the hell are these illiterate maulvis to decide whether I'm a Muslim or not?”
On New Year’s Eve, he had written on Twitter: “I was under huge pressure 2 cow down b4 rightest pressure on blasphemy. Refused. Even if I'm the last man standing.”
A number of people have been sentenced to death under the blasphemy law.
Most cases are thrown out by higher courts and no executions have been carried out, but human rights activists demand the law's abolition.
Last night, the assassination of Mr Taseer, a media tycoon and businessman who was appointed governor in 2008, was condemned by both distraught colleagues and angry civil society groups.
“He was the most courageous voice after Benazir Bhutto on the rights of women and religious minorities,” Farahnaz Ispahani, a senior aide to Mr Zardari and a friend of Mr Taseer, told reporters. “God, we will miss him,” he added.
Ali Dayan Hasan of Human Rights Groups, which has campaigned to abolish the laws, said: “Taseer showed himself to be a rare politician, willing to risk his life in espousing an unambiguous position against discrimination and abuse. His assassination is a cause of sadness for human rights defenders.”
Reports suggested the police commando who killed Mr Taseer as he arrived at the city's Kohsar Market was a member of the so-called Elite Force, based in Rawalpindi.
The bearded guard, identified as Mumtaz Qadri, had afterwards boasted about the assassination, saying he was proud to have killed “a blasphemer”.
The assassination of Mr Taseer came as the country's ruling Pakistan People's Party (PPP) was already stumbling following the decision by a coalition partner, the Muttahida Qaumi Movement (MQM), to join the opposition benches.