Cabral was reportedly ambushed by gunmen while heading from his hotel to the nearby airport in Guatemala City early Saturday morning.
The singer died at the scene, while his agent was also shot and is in stable condition in hospital, CNN reports.
The motive for the attack is not yet clear, and police are investigating whether the shooting was an attempted robbery or a targeted attack on Cabral. His SUV was reportedly accompanied by another vehicle carrying bodyguards.
Guatemala has one of Latin America’s highest murder rates. An average of 18 people are murdered per day in Guatemala, which has a population of about 14 million, Agence France-Presse reports.
Cabral, 74, had performed Thursday in the city of Quetzaltenango, 120 miles west of the capital, and was heading to Nicaragua for more concerts.
Cabral became famous in the early 1970s as a protest singer in Argentina. In 1996, Unesco declared him a "world messenger of peace.”
Cabral’s best-known song was "No Soy de Aqui ni Alla" (I'm Not From Here or There), which was recorded in a number of languages, the BBC reports. Julio Iglesias and Neil Diamond are among the many singers who recorded versions of the song.
Guatemalan Nobel Peace Prize winner Rigoberta Menchu traveled to the scene of Cabral’s killing, and wept.
"For me, Facundo Cabral is a master," she told reporters. "He loved Guatemala greatly."
A wave of violence has rocked Guatemala ahead of elections, CNN says, with the International Crisis Group warning in a report last month that the violence was putting the country’s political institutions at risk.