Gulnar alias Muskan, 38, was targeted by four gunmen in the upscale Gulburg area of the city yesterday.
A police official said that four gunmen entered the house of the singer and shot her dead last evening.
"We are investigating the murder incident and it is too early to say the motive of the killing," he said, adding a case of murder against unknown assailant has been registered.
The singer originally hailed from Par Hoti area of Khyber Pakhtunkhwa's Mardan district, but had settled in Peshawar.
Artists in Khyber-Pakhtunkhwa are often targeted by the Taliban militants as well as relatives some of whom consider singing and dancing as against the family honour.
Popular singer Ghazala Javed, 24, was killed in 2012 in Peshawar along with her father.
Initially, it was believed that she was targeted by the Taliban but a local court in December 2013 found her former husband guilty of crime and awarded him death sentence.
Taliban consider music and dancing as anti-Islamic.
They frequently attack music shops in the province and ask artists to stop singing.
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