The 44-year-old, originally from Belarus but a Russian citizen who worked for Ukrainska Pravda, an independent news site, died when an explosion tore through the car he was in.
The charred car with all the doors open stood on the cobbled street behind a police cordon.
“Pavel Sheremet’s death is the result of an explosive device. It’s murder,” said Prosecutor-General Yuriy Lutsenko on Facebook.
President Petro Poroshenko described his death as a “crime” and a “tragedy”.
An aide to interior minister Zoryan Shkiryak said on Facebook that the explosive device was believed to be the equivalent of 400 to 600 grams of TNT, possibly set off remotely or on a timer.
“All possible scenarios of this cruel crime are being looked into,” Shkiryak said, adding that explosives experts were working at the scene.
A taxi driver who gave his name only as Petro, told AFP that Sheremet “was driving along Ivana Franka street and stopped at the turn and then an explosion went off. The flames from the windscreen went up to the second floor.”
The taxi driver said he helped drag Sheremet out of the car and he was still alive when the emergency services arrived but was unable to speak from pain.
Sheremet had worked for several years at Ukrainska Pravda, whose founder Georgiy Gongadze was murdered in 2000 after opposing then-president Leonid Kuchma.
The editor of Ukrainska Pravda Sevgil Musaieva-Borovyk told AFP he thought Sheremet was killed for his “professional activity.”
“Why do they kill journalists in Ukraine? Someone wants to destabilise the situation in the country by doing this,” the editor said.
Sheremet also worked on a radio station Vesti, where he was due to host a show after leaving home Wednesday morning. The station is criticised by some Ukrainians as being too pro-Russian.
Sheremet was born in Belarus and in television there before leaving due to a conflict with the repressive regime of Alexander Lukashenko. He founded the popular Belarussky Partizan opposition news website.
He then worked for Russia’s ORT television network and at one point was anchor on the country’s most watched news show Vremya, or Time.
He later worked for Russia’s state Obshestvennoye Televideniye, or Public Television, a channel set up in 2013, but resigned in 2014 in protest at Russia’s stance towards Ukraine in covering the upheaval in the country.