Three men allegedly wearing burkas barged into the office of the Chittoor Municipal Corporation in Andhra Pradesh and attacked the couple, both leaders of the ruling Telugu Desam Party (TDP).
According to eye witnesses, the attackers opened fire and also attacked the couple with knives and daggers.
While Anuradha succumbed while being shifted to a hospital, her husband is in critical condition. Mohan was first taken to a hospital in Chittoor and later shifted to Christian Medical College (CMC) Hospital Vellore in neighbouring Tamil Nadu.
Three attackers suspected to be from Karnataka later surrendered before the police. Old rivalry is reportedly the reason behind the murder.
Police recovered a country-made weapon from the scene.
Chittoor is home district of Andhra Pradesh Chief Minister N. Chandrababu Naidu, who condemned the attack terming it as "inhuman".
Tension gripped the town following the killing. Police deployed additional forces to prevent any untoward incident.
Mohan is the prime accused in the case of attempt to murder of former legislator C.K. Jayachandra Reddy alias C.K. Babu.
Babu, a four-time MLA who dominated Chittoor politics for long, had escaped but two people including his gunman had died in the attack in 2007. Babu quit Congress and joined YSR Congress party last year.