The militants fired at the jeep in the high security commercial area of G-11 on the outskirts of the city, killing Brigadier Moin-ud-Din and a soldier on the spot, before making a getaway. The driver of the jeep was injured in the attack.
Television footage showed the vehicle was riddled with bullets and its windscreen shattered. The windshield was hit by more than 10 bullets.
Moin-ud-Din was the second Brigadier ranking officer to have been killed by a spate of violence which has rocked the country for the past fortnight leaving more than 185 people dead.
Another Brigadier and a Colonel were among 23 people killed when Tehrik-e-Taliban militants stormed the Army's Headquarters in the garrison town of Rawalpindi this month.
Though no group immediately claimed responsibility for the attack which was the second assault in Islamabad in three days, but army said it was the handiwork of the Taliban, which has been blamed for a wave of attacks on security forces.
Islamabad's Inspector General of Police Kaleem Imam told reporters: "It looks like a targeted killing. It appears that someone was following (the Brigadier's) movements."
The attack on the Brigadier came amidst heightened security in the Pakistani capital as police braced for Taliban's strikes in reprisals for ongoing military offensive in South Waziristan and other areas in the restive NWFP.
Authorities have already shut down schools and other educational institutions indefinitely after Tuesday's suicide attack on Islamic University here which left six persons dead.
Brigadier Moin-ud-Din was serving with the UN peacekeeping mission in Sudan and had returned to Pakistan only a few days ago following his father-in-law's death.
Police said the assailants had tracked his movements and attacked him after following him this morning. Several bullets also hit a vehicle parked at an automobile workshop. Security forces cordoned off the area and sealed several roads after the incident and launched a search for the attackers.
Police detained about 50 suspects soon after the attack that occurred at 8.30 am local time. The head of the Noor-ul-Furqan seminary, located near slain Brigadier's home, and a teenage boy were among suspects rounded up by police.
Inspector General Imam said investigators had searched two seminaries and were questioning six witnesses.
The probe will also focus on unregistered mosques and seminaries whose leaders had delivered "hate speeches" or indulged in other illegal activities, he said.
Meanwhile, police today evacuated a busy commercial area in Islamabad following reports that a bomb had been planted there and militants exchanged fire with security personnel. The report later turned out to be hoax.
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