Several hundred people gathered to watch the execution of Waheed Khan, 25, near the main market in Miranshah, an AFP reporter said.
The role of executioner fell on the cousin of two brothers he was found guilty of killing in Miranshah.
"Waheed Khan was picked up three weeks ago by the Taliban and investigated and found guilty of cold-blooded murder by a Taliban court. The accused gave no reason for killing the two men," a militant who asked not to be named told AFP.
"We asked the relatives of the deceased men to forgive, but they refused and under Islamic law it was decided that the convict be shot by them," he added.
Witnesses said the executioner was given a Kalashnikov rifle with six bullets in it, which he fired at a handcuffed and blindfolded Khan who was forced to sit on the ground.
Local administration and intelligence officials confirmed the execution but refused to comment.
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