Zeevi, 76, was taken to the hospital with critical head injuries. Hadassah hospital Professor Shmuel Shapira said Zeevi was "in very serious condition."
A spokesman for the Popular Front for the Liberation of Palestine, Ali Jaradat, assumed responsibility for the attack. In a statement to Hezbollah's TV station Al-Manar Jaaradat said it was in retaliation for the August slaying of PFLP leader Abu Ali Mustafa in Ramallah, Israel Radio reported.
Zeevi was shot at the Hyatt Hotel as he went to his room on the 8th floor after breakfast, so he might have been followed there. His wife found him on the floor moments later.
The Hyatt hotel is near the border between Jewish and Palestinian neighborhoods in east Jerusalem.
General Levy said the police will question all the workers and guests. No one, including hotel guards, heard the gunshots, he added.
Zeevi, who established the Moledet Party that later helped formed the Ihud Leumi-Israel Beiteni faction, tendered his resignation Monday.
An opponent of Israeli-Palestinian interim peace agreements, Zeevi protested Prime Minister Ariel Sharon's policies, saying they were too conciliatory. Zeevi advocated a "transfer" of West Bank and Gaza Strip Palestinians.
His resignation was to take effect later Wednesday.