Police said the attackers shot Aijaz Ahmed Reshi near his home in Sopore, 45 kilometres (28 miles) northwest of the main city of Srinagar, triggering panic among residents.
"He (Reshi) died on the spot. He was a surrendered terrorist," deputy inspector general of police for the area, Gareeb Dass, told AFP.
The killing led to clashes between demonstrators and government forces elsewhere in the region, with police firing tear gas to disperse protesters.
Read: Rejoinder to India: Pakistan, Kashmir inseperable, says Raheel
The targeted killings began Tuesday when unknown gunmen shot and killed an activist with the group which is led by Kashmir's top separatist leader Syed Ali Geelani.
That was followed by the assassination of two more activists, one a sympathiser of the same separatist group and another a former rebel, on Friday and Sunday.
Dass said initial police investigations indicated Hizbul Mujahideen militants may be behind the attacks.
Tens of thousands of people have died in the revolt that broke out in 1989, most of them civilians.
But the manner of the latest killings has panicked some separatist activists and former rebels.
Read: India suppresses Kashmiri Muslims, holds sham elections at gun-point: FO
Geelani last week compared them to targeted killings of the mid-1990s, when government-sponsored militias known as Ikhwanis killed a number of rebels and separatist activists.
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