The Serbian Prime Minister, Zoran Djindjic, has been assassinated in the capital, Belgrade.
The pro-reform, pro-Western leader was shot in the stomach and in the back outside government offices at around 1300 (1200 gmt), and died of his wounds in hospital.
Acting Serbian president Natasa Micic later declared a state of emergency under which some civil rights can be curtailed and the army takes over police duties.
Police carrying machine-guns have sealed off the area where the incident occurred, searching cars and checking passengers, while all bus, rail and plane traffic in and out of Belgrade has also been halted in the search for suspects.
Unconfirmed reports say two people have been arrested.
The Serbian cabinet, which observed a minute's silence when it met for crisis talks after the attack, has declared three days' mourning.
"This criminal act is an absolutely clear attempt by those who have tried to prevent Serbian development and its democratic process with assassinations in the past, to change the course of history and isolate Serbia yet again," said Nebojsa Covic, a deputy prime minister.
Correspondents say the assassination of the prime minister heralds the start of turbulent days for Serbia, leaving the country with a potentially dangerous political power vacuum.
Vojislav Kostunica, former Yugoslav president and long a rival of Mr Djindjic, said he was appalled by the attack.
"The fact that political violence is happening... is a terrible warning about how little headway we have made on the path of real democratisation of our society," he said just before Mr Djindjic's death was confirmed.
The European Union expressed shock and dismay at the assassination, with Greek Foreign Minister George Papandreou, whose country holds the EU presidency, sending condolences to Mr Djindjic's family "and to entire Serb people".
"Europe has lost a friend... who fought hard for democracy," an EU statement said.
A former adviser to EU High Representative to Bosnia Carl Bildt, Dame Pauline Neville-Jones, paid tribute to Mr Djindjic:
"This is a really bad day for the Balkans, and it's a really bad day for Serbia.
"Here was a man who more than any other single figure stood for the reform process, and... it now throws all the cards in the air."
The prime minister's wife Ruzica seen in tears at the city's Military Medical Academy where her husband died.
On 21 February Mr Djindjic survived what he said was an assassination bid when a lorry swung into the path of his motorcade as he was travelling to Belgrade airport.
He later dismissed the incident as a "futile effort" which could not stop democratic reforms.
Correspondents say that Mr Djindjic, 50, made many enemies over his career as a pro-democracy campaigner and then as Serbia's prime minister.
He was pivotal in arresting and handing Mr Milosevic over to the war crimes tribunal in The Hague in June 2001.
The move opened the way to international aid to the then Yugoslavia.
Committed campaigner
Zoran Djindjic was born in Bosanski Samac, Bosnia, the son of a Yugoslav People's Army officer.
Quote:CATALOGUE OF VIOLENCE
March 2003: Serbian premier Zoran Djindjic shot dead
Feb 2003: Djindjic says attempt made on his life
June 2000: Serb opposition leader Vuk Draskovic survives shooting
May 2000: Goran Zugic, national security adviser to pro-West Montenegrin president, shot dead
October 1999: Draskovic survives road accident "assassination attempt"
He graduated from Belgrade University's philosophy faculty, but was jailed by Yugoslavia's Communist leader Josip Broz Tito in 1974 for trying to organise an independent students' group.
After his release, he went to West Germany and earned a PhD in philosophy.
Spurning the Communists, he returned to Belgrade in 1989 and co-founded the Democratic Party, joining other reformists to campaign against the authoritarian rule of Slobodan Milosevic.
After fleeing to Serbia's sister republic Montenegro during the Nato air strikes on Yugoslavia in 1999, Mr Djindjic returned to Belgrade to form the DOS movement with 17 other parties.
Their new street crusade for democracy culminated in the overthrow of Mr Milosevic after he refused to accept election defeat.
Source BBC