Sri Lankan Foreign Minister Lakshman Kadirgamar has been assassinated in a gun attack in the capital, Colombo.
Kadirgamar was hit by snipers near his heavily-guarded home
The murder was blamed by a senior police officer on the separatist Tamil Tigers, who have been observing a ceasefire since 2002.
A spokeswoman for the Norwegian monitors overseeing the truce warned that the killing could "put the whole ceasefire under risk".
President Chandrika Kumaratunga has now imposed a state of emergency.
"It is a legal measure to enable the free deployment of emergency troops," a presidential spokesman told the Reuters news agency.
Mr Kadirgamar, 73, was shot near his heavily-guarded home on Friday evening.
Police believe one or two snipers carried out the attack, hitting the veteran minister several times in the head and chest.
He was rushed to hospital in a critical condition. He died later despite undergoing emergency surgery.
A large security operation was launched after the shooting, with armed police cordoning off the area as helicopters circled overhead.
Police sources said two men had been arrested but gave no further details.
A senior police officer quoted by Reuters blamed the rebels, who want an independent state in the north, for carrying out the attack.
"It's the Tigers," Inspector General of Police Chandra Fernando told reporters, the agency said.
Mr Kadirgamar had considered himself to be a potential target of the group, reports said.
A big police hunt was launched after the attack
Vilja Kutvonen, spokeswoman for Nordic Sri Lanka Monitoring Mission, told Reuters the minister's death was a big blow to the peace process.
She said: "It's likely to have serious consequences. It puts the whole ceasefire under risk."
The truce has recently been under growing strain, amid rebel claims that the government was continuing to conduct a covert war against them.
The minister, who was himself from the South Asian island's minority Tamil community, was a close aide of President Chandrika Kumaratunga.
He was appointed foreign minister in April 2004, but had previously held the position from 1994 to 2001.
A lawyer by training, Mr Kadirgamar was seen as a tough opponent of the Tamil Tigers. He played a key role in getting the group listed as a banned militant organisation in the US and the UK.
"He worked tirelessly for peace throughout his career. It is a great loss," Justice Minister John Senevirathne told reporters who had gathered outside the National Hospital in Colombo.
US Secretary of State Condoleezza Rice, who last met Mr Kadirgamar in June, said those responsible must be brought to justice.
"This senseless murder was a vicious act of terror, which the United States strongly condemns," she said in a statement.
Condoleezza Rice said Kadirgamar had devoted his life to peace
She praised Mr Kadirgamar as a man of "dignity, honour and integrity, who devoted his life to bringing peace to Sri Lanka".
"Together, we must honour his memory by re-dedicating ourselves to peace and ensuring that the ceasefire remains in force," she added.
UN Secretary General Kofi Annan condemned the murder, spokesman Stephane Dujarric said in a statement quoted by the AFP news agency.
"He deplores in the strongest of terms this criminal and senseless act and hopes that the perpetrators will be found and brought to justice," the statement said.
"Sri Lanka has lost a deeply respected statesman dedicated to peace and national unity."