Habibullah Khan was killed along with two bodyguards and a civilian bystander in the afternoon attack in Ghazni province's Moqur district, police said. At least 14 civilians were wounded, most of them shoppers and merchants.
Deputy Provincial Police Chief Asadullah Insafi said Khan led an uprising last year against the Taliban's shadow government in his district, driving the insurgents out.
Taliban insurgents have pushed a campaign of assassinations of pro-government figures to try to weaken confidence in Afghan government ahead of the withdrawal of most international forces by the end of next year.
In the past week alone, a provincial council chief along with 13 others were killed in a suicide bombing at the council headquarters, and twin blasts killed nine people in an elite gated community for government officials and business owners outside of the southern city of Kandahar.
The Taliban seek to re-establish the strict interpretation of Islamic law they imposed for five years before being ousted in the 2001 U.S.-led invasion over its sheltering of al-Qaida's leadership.
Another common insurgent tactic is planting makeshift land mines on roads. A suspected bomb maker in Ghazni died Wednesday when explosives he was carrying on a bicycle went off without warning. Two bystanders were wounded, police said.
A motorcycle hit a roadside bomb in the southern province of Helmand on Wednesday. The driver was killed and three bystanders were wounded, said Deputy Provincial Police Chief Ghulam Rabbani Bahawi.