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Two gunman on a motorbike are reported to have shot Colonel Sayad Khodai five times in a car outside his home.
So far, no group has claimed responsibility for Sunday’s attack, and a manhunt is under way for the gunmen.
It is the biggest security breach in Iran since 2020 when a leading nuclear scientist was killed, the BBC’s Middle East Editor Sebastian Usher says.
Images from the scene show a bloodied man slumped over in a car with his seatbelt still on.
Colonel Khodai was a senior member of the elite Quds Force, a shadowy external arm of the Revolutionary Guards (IRGC) that carries out operations abroad. The US accuses the force of supporting terrorist organisations and being responsible for attacks across the Middle East.
Iranian Foreign Ministry spokesman Saeed Khatibzadeh said the colonel was assassinated by “sworn enemies” of Iran who are “the terrorist agents affiliated with the global arrogance” and said other countries that “claim to be fighting terrorism are regrettably silent and support it”.
As news of the assassination broke, Iranian state news reported that Revolutionary Guards had exposed and arrested a network of Israeli spies. There has been no official comment from Israel.
Khodai is the second high profile Quds Force leader to be killed in recent years.
In 2020, Iran’s most powerful military commander, Gen Qasem Soleimani, was killed by a US air strike in Iraq. He spearheaded Iranian military operations in the Middle East as head of the Quds Force, and his death marked a major escalation in tensions between Washington and Tehran.
In the same year, nuclear scientist Mohsen Fakhrizadeh was shot dead in Tehran. Fakhrizadeh – who was so important he was always accompanied by several bodyguards – played a crucial role in Iran’s nuclear programme but the government insists its nuclear activities are entirely peaceful.
Iran accused Israel of using a remote-controlled weapon to kill him.