Al-Islah assistant secretary general Sadeq Mansur died "immediately" when a device inside the door of his car exploded in the country's third city Taez southwest of Sanaa, the official told AFP.
Police are trying to identify the attackers, the official added.
Supporters of the Muslim Brotherhood-linked Al-Islah have been resisting an advance by Shiite Huthi militiamen who easily overran the capital Sanaa on September 21 and who have since been expanding farther south.
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Early this month, the Huthis attacked Al-Islah headquarters in the southwestern city of Ibb, killing three people.
Dozens of people have also been killed in fighting between armed Shiites and Sunnis in central Yemen.
The Shiite militias did not enter mainly Sunni Taez, 250 kilometres (155 miles) from Sanaa, after a deal was struck between the provincial authorities and the Huthis' representatives to avoid fighting there.
Mansur's murder comes just over two weeks after another politician, the liberal Union of Popular Forces secretary general Mohammed Abdulmalik al-Mutawakil, was gunned down in Sanaa.