Unidentified gunmen gunned down Nasiruddin Haqqani, eldest son of the group's founder, as he bought bread on the edge of Islamabad on Sunday evening.
Haqqani was the chief financier of the Haqqani militant network who are affiliated with Afghan Taliban and are the most feared group fighting US-led and Afghan forces in Afghanistan.
They have been blamed for spectacular attacks on Afghan government and NATO targets across Afghanistan, as well as for kidnappings and murders.
"His death is a big loss for Islamic Emirate and all Afghanistan," it said.
More From This Section
Eyewitnesses described attackers on motorbikes spraying Haqqani with automatic gunfire at a bakery in Bhara Kahu on the northeastern edge of Islamabad.
There was no immediate claim of responsibility for the killing, which came less than two weeks after a US drone strike assassinated Pakistani Taliban chief Hakimullah Mehsud in North Waziristan tribal district.
The United States put the Haqqani network on its terror blacklist in September 2012, and the Pentagon said the group represented a "significant threat" to national security.