Bhutto, 42, was taken to hospital with six gunshot wounds to his neck and abdomen and died later, officials said.
The clash took place after a rally called by Bhutto, who opposes Benazir, his sister, and has been demanding her resignation. They have been estranged since he returned in 1993 after 16 years' exile in Syria. Witnesses said dozens of Murtaza Bhutto's supporters, apparently armed, attacked the Karachi police chief's nearby house and his guards opened fire.
There has been considerable tension between police and Murtaza Bhutto's supporters following the arrest of one of his key aides, Mohammed Ali Sunara, wanted on charges ranging from terrorist acts to murder.
Hundreds of paramilitary officers and police were deployed in the Clifton Road neighbourhood, home to some of Pakistan's wealthiest people, and many diplomats. A curfew was imposed and the streets cleared of traffic. Police reportedly ripped film from several newspaper photographers' cameras before smashing them.
When he returned to Pakistan, Murtaza Bhutto was arrested on a charge of air piracy in connection with the hijacking of a Pakistan International Airlines plane in 1981.
He proclaimed his innocence and accused his sister of harassing him.Reuse content