Co-operatives and Rural Development Minister Jimmy Lemi Milla was shot in his office in central Juba. His bodyguard, whose gun was used in the shooting, was also killed.
The killer has been identified as Emmanuel David Luga, the late minister's brother-in-law and former chauffeur.
He's believed to have sought revenge on Milla after being sacked from his job two months ago. Luga is currently being detained by security services.
Crowds gathered outside the ministry compound to express their shock as the two bodies were removed. The area has been secured and the situation is under control, according to officials, who stressed that the shooting was a personal matter and not a sign of wider insecurity.
Salva Kiir, president of South Sudan and head of the ruling Sudan People's Liberation Movement (SPLM) to which Milla also belonged, expressed his "deep sorrow" at the killing and declared three days of mourning.
Milla's murder comes two days after the announcement of final results in South Sudan's referendum on independence, in which almost 99 per cent of southerners voted for secession from the North.