Denis Donaldson's body was discovered by a neighbor, the BBC reported.
Donaldson, after admitting his ties to British intelligence last year, moved from Belfast in Northern Ireland to a cottage with no electricity or running water near the village of Glenties in County Donegal. He had been Sinn Fein's administrative chief at Stormont, the Northern Ireland parliament.
The killing occurred just before a planned visit to Belfast by British Prime Minister Tony Blair and his Irish counterpart, Bertie Ahern, in an effort to revive the Stormont parliament.
Michael McDowell, the Irish justice minister, said that an Irish police officer saw Donaldson alive Monday evening.
Gerry Adams, head of Sinn Fein, condemned the killing and said he spoke to Donaldson's family before the death became public.
"It has to be condemned. We are living in a different era, and in the future in which everyone could share," Adams said. "This killing seems to have been carried out by those who have not accepted that."