Miscreants fired at Molla Waliar Rahman, 55, at Abhaynagar town's Guakhola area around 7am, said Abhaynagar Police Station OC Soyruddin Ahmed.
He died while being taken at the Khulna Medical College and Hospitals.
Rahman, a councillor of Nowaparha Municipality, was also president of some local labour organisations.
Agitated workers blocked the Jessore-Khulna highway around 8am forcing suspension of traffic.
OC Ahmed said they are trying to control the situation.
Quoting locals, he told bdnews24.com three men, riding on a motor bike, shot Rahman while he was taking a walk after the morning prayers at the 'Professor Parha Mosque' at Guakhola area.