Jan Mohammad Khan, the former governor of Afghanistan's Uruzgan province and a key ally of President Karzai, was killed Sunday in a suspected Taliban attack.
A member of the Afghan Parliament was also killed during the attack by gunmen. The murders took place in a Kabul district near the country's legislative building.
The deaths come less than a week after the president's half-brother Ahmed Wali Karzai was assassinated at his home in the southern province of Kandahar on Tuesday, just days after 3,000 Canadian troops ended their combat mission in Kandahar.
Local reports say unidentified armed men raided the house of Jan Mohammad Khan, as well as that of the former governor of Uruzgan Province. Afghan security troops rushed to the site, in an effort to control the situation and one of the attackers was killed in the ensuing firefight.
Interior ministry spokesman Siddiq Siddiqi said at least two gunmen had been involved in the attack, which began at about 8pm local time (1530 GMT).
"They were not suicide bombers, they were carrying weapons. One of them is dead, one other is still resisting," the AFP news agency quoted him as saying. According to Mr Siddiqi, one man carrying an AK47 and a grenade launcher had been captured.
However, Defence Ministry official Gen Zahir Wardak said the attackers had been wearing suicide vests, the Associated Press reported.
Jan Mohamamd Khan was an important tribal elder and a close ally of Hamid Karzai and even helped the president when he went to fight the Taliban after they were bombed by the US forces.
However just like Karzai's brother, Kahn was a controversial figure, often accused of supporting local militias and abusing human rights. He was moved to Kabul, where he served as a senior adviser to the president and travelled to Kandahar for Mr Karzai's half-brother's funeral last week.
The death of Khan will come as a huge blow to President Karzai, who is now deprived of two of his most loyal supporters. Khan was said to mobilize his tribe and resources to help the government fight the insurgency in the south of Afghanistan and was thus one of the president's closest ally.
While officials maintain that despite rising casualty numbers, security has improved in a number of areas of the country following a surge of extra American troops and tens of thousands of new Afghan police and soldiers, the Taliban, who have now claimed responsibility for the attack, prove that the fight against the Karzai regime has intensified and is not likely to end soon.