Lucky Dube pictured on his most recent album, Respect
He was dropping his teenage son and daughter off in a Johannesburg suburb when he was attacked by car thieves.
Local radio stations have been flooded with tearful callers expressing outrage at the murder and renewing demands that the authorities act to curtail crime.
South Africa's leader paid tribute to him and called on people to "confront this terrible scourge of crime".
Alongside Bob Marley, Lucky Dube was thought of as one of the great reggae artists - singing about social problems.
He was also one of the apartheid regime's most outspoken critics.
Correspondents say the killing of the 43-year-old singer has shocked South Africans who are already accustomed to one of the highest murder rates in the world.
Music producer TK of TS records and a friend of Dube's told the BBC the killing was tragically ironic.
"The whole continent has lost a performer, musician, a guy that fought for freedom in his own way, in his own right, was just shot by some guy who wanted to take his car, you know, which is Mickey Mouse really," he said.
Opposition parties and the youth wing of the ruling African National Congress party have called on the government to take drastic measures against crime.
Callers to radio stations have urged the country's rugby team to show some form of respect when they take to the field in Saturday's World Cup final against England in Paris.
BBC NEWS | Africa | Shock at SA reggae star shooting