For one, the death diminishes the chances of a peaceful resolution to the 10-year conflict in the troubled region as it gives a free hand to both separatist radicals and Kremlin hawks.
Maskhadov, one of Chechnya's two main rebel chiefs who was elected president in January 1997 and thus enjoyed widespread legitimacy among Chechens, was reported dead by the Russian military on Tuesday.
The soft-spoken 53-year-old former Red Army colonel became one of Chechnya's foremost rebel leaders during the first Russo-Chechen war, served as the president of a de facto independent Chechnya and headed the separatists during the ongoing second war, acting as a restraining influence on his hardline counterpart, Shamil Basayev.
"He was a restraining force," his longtime ally and spokesman Akhmed Zakayev said from Britain where he has received political asylum.
"The situation now risks getting out of hand," he added.
With Maskhadov gone, Basayev - who has claimed responsibility for attacks such as the one on Moscow's theatre and the Beslan school siege that together left nearly 500 people dead - is likely to assume the post of Chechnya's rebel leader.
"His death leaves the way open for the radicals," said Alexander Cherkassov, the head of the respected Memorial non-government group in Moscow. "The conflict will not be less bloody, on the contrary."
"Those people who were insisting on talks with separatists ... have been knocked off their feet," said Taus Djabrailov, a high official in the pro-Moscow administration in Chechnya.
"His death leaves the way open for the radicals. The conflict will not be less bloody, on the contrary"
Alexander Cherkassov, head of
non-government group Memorial
At the Kremlin, the hawks will likewise be free to harden their policies in Chechnya now that the man whom the West recognised as a legitimate representative of the Chechen separatist cause is dead.
"This is no longer a fight against separatists but an eternal fight against Islamic terrorism," said Andrei Piontkovsky, an analyst in Moscow.
With Maskhadov dead, the Kremlin will be free to pursue its iron-fisted policies in Chechnya where the authority of radical Basayev is likely to grow.
"He was a person with whom one could have started negotiations," said Lyudmilla Alexeveva of the Moscow branch of the Helsinki Group.
Without him, Moscow can say there is no one with whom to conduct negotiations.
"This is good for Putin and his ratings, for the first time in months something has happened to lift his standing," said Slexei Malashenko, an analyst in Moscow.
"It is too early to say what will happen to Chechnya's resistance, but there will certainly be a radicalisation," he added.