Khan, who was considered to be a key aide to Karzai, is the second close associate of the Afghan President to be killed within the span of a week. Earlier, the president's half-brother Ahmed Wali Karzai was shot dead by a close friend at his home in Kandahar, which also happens to be the birthplace of the Taliban.
AFP quoted a senior Afghan official as saying, "He (Khan) was very close to Karzai. He was as important as AWK (Ahmed Wali Karzai)."
Khan hailed from a powerful family, from the Popalzai tribe in Southern Afghanistan and according to reports, his nephew runs a 3,000-strong militia in Uruzgan.
The recent killings of high-profile leaders in the restive region has triggered fears of a resurgent Taliban, especially in the aftermath of the NATO forces gradual withdrawal after a decade-long war.
Analysts fear that the Taliban are trying to exact revenge in the weakened security scenario and are in the process targeting the President's key aides to let people know that they still are a powerful entity.