Tahir Elci was shot while he and other lawyers were making a press statement, said the mayor of Diyarbakir city, Firat Anli.
It wasn't immediately clear who were behind the attack and there were conflicting reports about what led to it.
Interior Minister Efkan Ala and other officials said the assault was against police officers and that Elci died in an ensuing clash, while the Diyarbakir Bar Association said the lawyer was the target of the attack.
Elci, 49, was the head of the bar association in the mainly Kurdish city and a human rights activists.
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He was briefly detained and questioned last month for saying during a live news program that the Kurdistan Workers' Party, or PKK, is not a terrorist organization. Soon after, he was charged with making terrorist propaganda and was facing more than 7 years in prison.
Turkey and its allies consider the PKK to be a terrorist organization. The group has been fighting for autonomy in southeastern Turkey since 1984.
Elci had said through his Twitter account that he had received death threats because of his televised comments. Authorities declared a curfew in the Sur neighborhood where the attack occurred a scene of frequent clashes between security forces and Kurdish youths.
The US Embassy expressed shock over Elci's death, calling him a "courageous defender of human rights."
"Our condolences go to his family, that of the policeman killed and to all of Turkey. A terrible loss," the embassy said on Twitter.
Elci was the lawyer for Mohammed Rasool, a journalist who has worked for The Associated Press as a fixer. Rasool was arrested in August in Diyarbakir while reporting for Vice News.