Police have taken three of the assailants into custody.
The police said the attack could be a fall-out of a family dispute.
"The incident occurred at Chittoor Municipal Corporation at around 11.30 am when five-six persons with their faces covered barged into the Mayor Katari Anuradha's chamber and stabbed her and shot at her," inspector general of police (Rayalseema) V Venugopal Krishna told PTI.
Anuradha, aged around 50, belonged to the ruling TDP.
"She died of stab injuries...She also had bullet wounds. The husband's condition is critical," the IGP said. Mohan was taken to the Christian Medical College Hospital at Vellore.
"As per the preliminary information, the attack was carried out following a family dispute....A financial angle has also come to light and Mohan's nephew Chandrasekhar alias Chintoo has emerged as the prime suspect," Krishna said.
The CCTV footage showed six persons entering the Mayor's chamber. Some of the attackers belonged to Karnataka, he said, adding three of them had been taken into custody.
Tension prevailed in Chittoor city following the incident. Some two-wheelers were set on fire near Chandrasekhar's office. "Prohibitory orders have been imposed and the situation is now under control," the IGP said.
Andhra Pradesh Chief Minister N Chandrababu Naidu expressed grief and condemned the incident terming it "a very heinous act".
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