'I'm so scared'
His death came a day after he told colleagues he feared for his life in Kismayo amid escalating insecurity.
"I do not know if I can work in this hostile environment anymore. I am so scared," he had said to AFP news agency staff.
The British Broadcasting Corporation in Kenya confirmed Dahir's identity.
"We are shocked by what has happened and are trying to ascertain further information," a BBC spokesman in London said.
Dahir, who worked as a freelancer for the BBC as well as other news agencies, was the vice-president of the National Union of Somali Journalists (NUSOJ), a Somali-based press rights group.
The Paris-based Reporters Without Borders said in a statement: "We share the dreadful grief that has struck the family and colleagues of Nasteh Dahir Farah.
"The list of dead just goes on growing while the authorities take no steps to curb the violence which targets journalists.
"This apathy is disgraceful given that Somalia is Africa's deadliest country for journalists," the statement added.
The Mogadishu-based NUSOJ said targeting journalists would never dampen their resolve to record the conflict in Somalia.
"No-one is protecting Somali journalists, who have become targets for all the armed groups," Omar Faruq Osman, the group's secretary general said, in a statement.
"We will not stop our work because of these criminals."
The motive for Dahir's murder remains unknown.
The war-wracked Horn of Africa nation has been ranked as the world's second-deadliest country for journalists by the New York-based Committee to Protect Journalists.
Eight journalists were killed in Somalia last year, nearly all targeted in the course of their duties, but no one has been punished for their murder, according to media rights watchdogs, the AFP reports.
Many more journalists have also fled the country as the Somali government and anti-government fighters crack down on them, alleging that they are taking sides in the conflict that has spurred one of the worst humanitarian crises in Africa.
The Somali government has also been criticised for storming and shutting down radio stations.
Somalia has been stricken by bloody conflict since Mohamed Siad Barre, then president, was removed from power in 1991.
Numerous UN-backed initiatives have failed to restore stability in the nation of 10 million people.