Gunmen killed six people, including the head of a Japanese aid agency, in an attack on their vehicle in Jalalabad in eastern Afghanistan, officials said.
The ambush comes a week after a grenade attack on a United Nations vehicle in Kabul heightened fears for those doing humanitarian work in the country.
Tetsu Nakamura, head of Peace Japan Medical Services, had been involved in rebuilding Afghan irrigation and agriculture.
Just two months ago, Mr Nakamura was honoured for his humanitarian work in the country with honorary Afghan citizenship.
Japan Prime Minister Abe said he was shocked at death of Mr Nakamura.
"I was shocked that he had to die this way," Mr Abe told reporters, adding that the Afghan people had thanked Mr Nakamura for his contributions.
Mr Nakamura devoted 35 years of his life to healing Afghans and Pakistanis.
Often seen sporting Pashtun dress, the 73-year-old native of the southern city of Fukuoka headed to Peshawar in northwest Pakistan in 1984 to treat leprosy in Pakistanis and sick Afghan refugees.
The posting was meant to be for "five or six years," he said in an interview with national broadcaster NHK last year.
"The plan was to come home when I was done.
"We didn't have the proper facilities (for surgery and rehabilitation) but I couldn't just run away and abandon these people," he said.
The doctor founded Peace Japan Medical Services, known as Peshawar Kai in Japanese and went on to open a clinic in a remote village in Afghanistan in 1991.
But he quickly realised that he needed to treat the root causes of illness in Afghanistan, as well as the acute symptoms, and identified better irrigation to fight malnutrition as a priority area for his aid work.
"Starvation, drought... medicine cannot solve these problems. We realised we needed to go beyond the narrow field of medicine," he told NHK.
"As a doctor, nothing is better than healing patients and sending them home," he said.
"A hospital treats patients one-by-one but this helps the entire village. I love seeing a village that's been brought back to life," he added.
In 2003, Mr Nakamura won the Philippines' Ramon Magsaysay Award for peace and international understanding, often dubbed Asia's Nobel Prize.
On the political front, he was an outspoken opponent of the 2001 US-led war that ousted the Taliban regime, whom he defended as able administrators.
Nakamura was shot in the chest during the attack and was in the process of being transferred to a hospital in Bagram near Kabul when he died at Jalalabad airport.