Jyrgalbek Surabaldiyev was shot dead in the central square of the Kyrgyzstan capital, Bishkek, where parliament and several government agencies are located.
His driver was wounded in the attack but was able to give testimony to investigators before being hospitalised, Kyrgyz Interior Minister Murat Sutalinov said.
The killing on Friday underlines tensions within the Central Asian country just one month ahead of presidential elections.
Surabaldiyev was a supporter of long-time president Askar Akayev, who was ousted by a popular uprising in March. Akayev fled to Russia.
Some of Surabaldiyev's political enemies accused him of organising mass looting in Bishkek after Akayev's removal to create a crisis of law and order for the new authorities.
Surabaldiyev owned a car market in the capital, and it could not be ruled out that his killing was related to business as much as politics.
The assassination highlights
tensions ahead of the polls
The two were intertwined under Akayev's rule, which was plagued by accusations that his family and associates sought to bring the most lucrative spheres of the economy under their control.
Sutalinov told parliament on Friday that two unidentified assailants had shot at Surabaldiyev as he was getting into his car. Surabaldiyev's driver shot back, and the assailants fled.
The dead MP lay on the street after the shooting, his white shirt splattered with blood and his head propped on a black attache case. His wounded driver lay close by, trying to reach a mobile phone that had fallen to the pavement.
Acting President Kurmanbek Bakiyev is considered the front-runner in the 10 July election, which is expected to pave the way for constitutional reform that would reduce the presidential term to one year and give broader powers to a prime minister and parliament.