Federal Investigation Agency (FIA) prosecutor Zulfiqar was shot multiple times by gunmen as he was driving to the next hearing in the Benazir murder case, reported Geo News.
His bodyguard was wounded in the attack, police said.
"Chaudhry Zulfiqar was driving his car. He lost control and the car crushed a woman passer-by," an official was quoted as saying.
"Zulfiqar was rushed to hospital where he succumbed to his injuries."
The gunmen fled on a motorbike.
The prosecutor was going to appear before the anti-terrorism court hearing the Bhutto case in neighbouring Rawalpindi city.
On Tuesday, former president Pervez Musharraf was placed under a two-week house arrest over charges that he conspired to murder Benazir.
Bhutto, who had twice served as prime minister, was killed in a suicide attack in the garrison city of Rawalpindi in 2007, shortly after she addressed thousands of her supporters at an election rally.