Muhammad Bilal Khan, 22, was with his cousin when he received a phone call on Sunday night to go from Bara Kahu area in Islamabad to G-9, where a man took him into the forest, Dawn newspaper reported citing Superintendent of Police Saddar Malik Naeem as saying.
Khan and his cousin were then attacked with daggers. The activist died in the attack while his cousin was severely injured. According to the police official, some people heard gunshots at the crime scene as well.
Funeral prayers for Khan were offered on Monday morning.
The blogger had more than 16,000 followers on Twitter, over 48,000 subscribers on YouTube and 22,000 on Facebook.
According to Khan's father Abdullah, his son's body had marks of a sharp tool. He said that the incident has created fear among the people and sought strict action against the people who had killed his son and injured a family member.
Khan was also a freelance journalist. The attack took place hours after Khan criticized the newly-appointed spy chief Lt. Gen. Faiz Hameed, reports say.
After the activist's killing, #Justice4MuhammadBilalKhan started trending on social media websites.
"Pakistani activist and journalist Mohammad Bilal Khan was shot dead last night in Islamabad. Khan was known for his criticism of the all-powerful military and its notorious spy agency," said one Twitter user.
"If you are an activist or a supporter of freedom of speech/opinion/expression, then you must help spread the word for famous blogger and activist @BilalKhanWriter, who was shot dead by unknown assailants in Islamabad," said another.
A case was registered under various sections including the Anti-Terrorism Act.
( With inputs from IANS )