Caruana Galizia, 53, ran a hugely popular blog in which she relentlessly highlighted cases of alleged high-level corruption targeting politicians from across party lines.
"There are crooks everywhere you look now. The situation is desperate," she wrote in a blog published on her site just half an hour before an explosion tore into her car.
Locals said Caruana Galizia had just left her house and was on a road near the village of Bidnija in northern Malta when the bomb detonated, sending her car flying into an adjacent field.
Maltese Prime Minister Joseph Muscat, who faced accusations of wrong-doing by Caruana Galizia earlier this year, denounced her killing, calling it a "barbaric attack on press freedom".
He announced that the U.S. Federal Bureau of Investigation (FBI) had agreed to help local police investigate the killing and was flying experts to the island as soon as possible.
"I will not rest until I see justice done in this case," he said in a statement, calling for national unity.
Around 3,000 people held a silent, candle-lit vigil on Tuesday evening in Sliema, just outside Valletta.
The hashtag Je Suis Daphne circulated widely among social media users on the island of 400,000 people, the European Union's smallest state.
"Everyone knows Caruana Galizia was a harsh critic of mine, both politically and personally, but nobody can justify this barbaric act in any way," Muscat said. "The only remedy for anyone who felt slandered was through the courts."
Muscat sued Caruana Galizia after she wrote blogs earlier this year saying his wife was the beneficial owner of a company in Panama, and that large sums of money had been moved between the company and bank accounts in Azerbaijan.
Both Muscat and his wife denied the accusations.
Looking for a vote of confidence to counter the allegations, Muscat called snap elections in June which he easily won. Recently, Caruana Galizia's outspoken blog had turned its fire on opposition politicians.
Malta Television reported that Caruana Galizia had filed a complaint to the police two weeks ago to say she had received threats. It gave no further information.
Opposition leader Adrian Delia said the blogger was the victim of a "political murder".
"Caruana Galizia revealed the Panama Papers and was the government's strongest critic," he said, calling for a independent probe of her killing.
"We will not accept an investigation by the Commissioner of Police, the Army commander or the duty magistrate, all of whom were at the heart of criticism by Caruana Galizia," he said.
WikiLeaks founder Julian Assange said he would offer a 20,000 euro ($23,578.00) reward for information leading to the conviction of Caruana Galizia's killers, and European politicians expressed dismay at her death.
Frans Timmermans, first vice president of the European Commission, tweeted that he was "shocked and outraged", adding that "if journalists are silenced our freedom is lost".
Manfred Weber, head of the conservative bloc in the European Parliament, said the killing marked "a dark day for democracy".
Caruana Galizia took aim at politicians and senior officials from across Malta, seeing the island as a hotbed of corruption.
"Malta's public life is afflicted with dangerously unstable men with no principles or scruples," she wrote last year.
Her family asked that the magistrate assigned to investigate the case, Consuelo Scerri Herrera, be substituted because of an alleged conflict of interest, court documents showed. Herrera had sought libel damages after Caruana Galizia attacked her in her blog.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Follow NDTV for latest election news and live coverage of assembly elections 2019 in Maharashtra and Haryana.
Subscribe to our YouTube channel, like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.