Cesare Tavella, 50, was shot thrice from a close proximity last evening in Dhaka's Gulshan diplomatic zone while he was jogging, police said.
The attackers fled the scene after Tavella fell to the ground. He was rushed to a nearby private hospital where doctors declared him dead, police said.
Tavella was working for the Netherlands-based ICCO Cooperation as manager of its Profitable Opportunities for Food Security (PROOFS) project, a police spokesman said.
One of the witnesses of the murder, a rickshaw mechanic, said he saw three assailants fleeing on a motorcycle. One of them was wielding a gun.
"We are not clear who killed him but we think it was a preplanned murder," Dhaka's police commissioner Ohiduzzaman Mian told reporters.
Another official confirmed that the killers did not take away the moneybag or his cell phone, indicating that the murder was not carried out by ordinary muggers.
Security officials here said this could be the militant group's first attack in Bangladesh.
However, Home Minister Asaduzzaman Khan said authorities had found no evidence that the Islamic State was involved in the killing.
Meanwhile, in the wake of the murder, the US, the UK and Canada have warned their diplomats and citizens of militant attacks in Bangladesh, asking them to remain alert.
The directives came today, a day after the UK issued a travel alert where it claimed militants may be targeting western interests in Bangladesh.
The US authorities prohibited all official government personnel from attending large gatherings, including events at international hotels in Bangladesh until further notice, unless they have obtained Regional Security Office permission.
Citing the alerts issued by Australia and the UK, Canadian High Commission in Dhaka this morning issued travel alert for its citizens, according to a statement issued by the Canadian government.
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