Palestinian medical sources and the journalists' union told reporters Khalil al-Zabin, 59, was ambushed early on Tuesday by several masked men after leaving his office in central Gaza and shot several times.
Al-Zabin ran a bi-monthly human rights magazine and also acted as an adviser to the veteran Palestinian leader.
He was very close to Arafat and a senior member of the ageing leader's Fatah movement.
He advised Arafat on human rights issues, said Aljazeera's correspondent in Gaza.
Arafat's Fatah movement, the main grouping in the Palestinian Liberation Organisation, as well as human rights organisations and the Palestinian Journalists Union all condemned the assassination.
The attack was the latest in a growing number of incidents targeting journalists in the Palestinian territories in what press activists say is an attempt to intimidate the local media.
Three weeks ago, an executive with a newspaper linked to the Palestinian Authority had his car torched in Gaza City, the victim told news agency AFP.
Munir Abu Razaq, a journalist and managing editor of the Al-Hayat Al-Jadida daily, said his car was set ablaze parked in front of his house in the southern Tal al-Hawa neighbourhood.
In early February, the offices of the Palestinian weekly Al-Dar were vandalised during the Islamic holiday of Eid al-Adha.
And on 8 January, a Gaza correspondent for the Arab television station al-Arabiya was beaten by masked men and hospitalised.
The station's offices in the West Bank town of Ram Allah were attacked last September by masked men claiming to belong to al-Aqsa Martyrs' Brigades, an offshoot of Fatah.
Palestinian journalists in the Gaza Strip staged a one-day strike on 9 February to protest against the attacks on them.
Also early on Tuesday, Israeli forces killed an unarmed Palestinian during a West Bank swoop, witnesses and military sources said.
The man was shot dead by Israeli
troops in Yatta village
They said the 27-year-old man was shot dead by troops who rolled into Yatta village outside the Palestinian-ruled city of Hebron before dawn, on a search for resistance fighters.
Israeli military sources said the man was killed after he tried to flee and ignored orders to stop, adding no weapons were found on him.
Palestinian locals said he had no known links to armed fighters waging an uprising that erupted in the West Bank and Gaza Strip in September 2000.
There was no immediate word of arrests in Yatta during the operation, which continued into Tuesday morning.