Assistant Sub-Inspector Kruparam Majhi had been kidnapped near Budhas village in Nuapada, about 550 km from here, Deputy Inspector General of Police Soumendra Priyadarshi told IANS.
Shortly after, his body was found, with at least three bullet wounds and his hands and legs tied.
Majhi, who was in charge of a police outpost at Dharmabandha, had been abducted by over 10 armed guerrillas when he was escorting a water tanker to a paramilitary force camp, about 15 km away, along with a constable on a motorcycle.
The guerrillas took away Majhi and left behind constable Debnarayan Sahu, who reported the incident. A search operation was launched in the area only to reveal that the Maoists had killed Majhi and fled, police said.
Although police blamed the Maoists, no rebel group has so far claimed responsibility for the crime.
"They (both the Majhi and constable) were unarmed and were on routine civil police duty. The constable managed to escape," Director General of Police M.M. Praharaj told reporters.
"The ASI was dragged to a nearby area and was killed by three gunshots," he said.
Describing the killing as brutal, he said an anti-Maoist operation was under way in the area to nab the culprits.
Majhi leaves behind him his family and small children. The government, Praharaj said, was taking steps to provide the necessary compensation, including Rs.10 lakh insurance and Rs.8 lakh ex-gratia.
He also said a government job would be provided to a family member.
The incident comes just days after Maoists released Odisha's ruling Biju Janata Dal (BJD) legislator Jhina Hikaka, more than a month after they had kidnapped him.
Hikaka had been abducted from Laxmipur in Koraput March 24 and released on April 26. Before him, Maoists in the state had abducted two Italian nationals but subsequently released them.
In neighbouring Chhattisgarh, Sukma district collector Alex Paul Menon was released May 3, after 12 days of captivity.
The 2006 batch Indian Administrative Service (IAS) officer had been abducted at gunpoint April 21 by rebels from a forested location, while he was interacting with tribals. The Maoists shot dead his two guards who resisted his abduction.
Left-wing extremism is the most formidable security challenge facing the country, Home Minister P. Chidambaram had said on April 16 at the chief minister's conference on internal security in New Delhi.
Prime Minister Manmohan Singh also referred to the issue and said the situation was better in 2011 than in 2010 but there was still a "long way to go".