Former Sinn Féin official Denis Donaldson, who had admitted being a British agent for more than 20 years, has been shot dead just outside the town of Glenties in Donegal.
Mr Donaldson, who was the former head of Sinn Féin's office at Stormont, had been living in Donegal since his admission of spying last year.
It is understood he had been dead for up to six hours when he was found by a neighbour at around 5pm. He had sustained a shot gun wound to the head and his body had suffered some mutilation.
A murder investigation has been launched.
Mr Donaldson's wife is still being sought by gardaí. It is not yet known if she was at the house at the time.
The scene has been preserved for technical examination.
IRA says it had 'no involvement' in killing
The IRA has said it had 'no involvement whatsoever' in the death of Mr Donaldson.
Sinn Féin's Chief Negotiator, Martin Mc Guinness, said he was very angry about the killing of Mr Donaldson. Speaking to RTÉ News, he described the death as an attack on the peace process.
Mr McGuinness said Sinn Féin absolutely dissociated itself from the killing and said whoever carried it out was hostile to the concept of peace in Ireland.
The Taoiseach, Bertie Ahern, has condemned what he called a brutal murder.
He said he hoped those responsible for 'this callous act' would be brought to justice as soon as possible.
DUP leader Ian Paisley said that the murder had political implications. Mr Paisley said that 'eyes will be turned towards IRA/Sinn Féin on this issue'.
He said that whatever activities Denis Donaldson may have been involved in, no-one in a civilised country is entitled to take another man's life.
Meanwhile, the Government has confirmed that Thursday's meeting in Armagh between the Taoiseach and British Prime Minister Tony Blair will go ahead as planned.
A Government spokesperson said the murder will serve to further concentrate efforts in terms of positive politics and the search for a lasting political solution in Northern Ireland.