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BBC NEWS | Middle East | Iran diplomat shot dead in Iraq
Iranian First secretary Khalil Naimi was attacked while driving near the embassy. Correspondents have seen a bullet-ridden car with a body inside.
At this stage it is not clear who carried out the attack or whether the diplomat was specifically targeted.
An Iranian foreign ministry delegation is in Iraq to try to assist in the crisis over the rebel leadership of cleric Moqtada Sadr.
Naimi died immediately, foreign ministry official Mohammad Nouri told the Associated Press news agency in the Iranian capital Tehran.
An Iranian official in Baghdad told another agency, Reuters, that Naimi had been driving to the office when “three men drove up and shot him”.
Najaf tension
The Iranian delegation - now reported to be in Najaf - has brushed off suggestions it is mediating between the US and Mr Sadr, saying it is merely "assessing" the situation.
Hussein Sedeqi is heading a delegation assisting in the Najaf crisis
Iraqi negotiators, however, say Iranian officials are trying to help resolve the standoff.
Mr Sadr, who US forces have vowed to "kill or capture", is barricaded inside Najaf, which is Iraq's holiest city.
The US has massed 2,500 troops in readiness for an offensive, though both sides have said they want to avoid bloodshed.
Wow, it's very interesting that Iran seems to be interceding to help defuse the crisis with Al-Sadr, since some have speculated that he is Iran's puppet in Iraq. Of course many said the same thing about SCIRI, but they seem to act as a moderate group, and are in the provisional government. It's also very interesting that their diplomat was killed. I have a feeling that there are alot of things occuring underneath the surface that we don't see.

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