Unknown gunmen opened fire on Adam Albani's car at about 10:30 pm (2130 GMT) yesterday in the city of Zaria, as he drove home from teaching a theology class.
Suspicions will likely fall on Boko Haram for carrying out the shooting, as Albani, 54, had criticised the group and given his support to the Nigerian military campaign against them.
His theology class was in the Tudunwada area of Zaria, where soldiers had carried out raids on two suspected militant hideouts in the past.
"We kept hearing gunshots very close to our homes and later we heard the sound of a car retreating and when we later came to the scene we found Sheikh Albani lying outside the car with lots of bullet holes on him," he added.
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"He was still alive but his wife and a child she was holding in the front seat were already dead while the rest of the children sitting in the back seat were unharmed."
The preacher had been a close ally of another prominent cleric, Jaafar Mahmud Adam, who was shot dead at his mosque in the northern city of Kano in April 2007.