Local media quoted officials as saying unknown gunmen "sprayed bullets" at Hassan al-Droui near a central market.
It is the first assassination of a member of Libya's transitional government.
Libya has suffered continuing lawlessness since the overthrow of Col Muammar Gaddafi in October 2011.
"Hassan al-Droui was killed by unknown attackers overnight, during a visit to his native city of Sirte," a security official told the AFP news agency.
Sirte was the site of the final battle of Libya's civil war, during which Col Gaddafi was captured and shot dead while trying to hide from rebels.
Mr al-Droui was a former member of the National Transitional Council, the political arm of the 2011 uprising.
The BBC reports he was appointed to his role by the transitional government's first prime minister and kept his position when Ali Zeidan took over.