"I can confirm that (Rzayev) has been killed, it happened this morning," Interior Ministry spokesman Sadiq Gozalov told AFP.
Baku-born Rzayev, 63, was shot as he left his home in central Baku, Gozalov said. "The general was shot and received a severe wound to the head. He was sent to the military hospital in Baku, where he died," he added.
At present officers of the Republican Military Prosecutor's Office are holding investigations at the scene of the incident, AzeriTrend News reported.
Gozalov said he had no information regarding a possible motive for the shooting.
Rzayev became the commander of Azerbaijan's air force in 1992, and a general in 2004. He was married with three children.
Rzayev was the most senior official in the country to have been killed since the 1990s.
Experts said the killing may have been a contract hit linked with Rzayev's role in large-scale military acquisitions Azerbaijan has made in recent years as government coffers surged from oil revenues.
"This is the most serious murder in the history of Azerbaijan's Defense Ministry," Baku-based military analyst Uzeir Jafarov told AFP.
"Rzayev was the focal point for air force and air defense military acquisitions and the largest part of (Azerbaijan's) military budget is being allocated for acquisitions in these spheres."
He said he was unaware of any personal problems that may have been behind the killing.
Jafarov also said Rzayev had no ambitions outside his role as air force chief and he doubted the killing may have been linked to an internal struggle within Azerbaijan's military.
Rzayev was also Azerbaijan's point man in negotiations between Russia and the United States over the use of the Gabala radar station in northern Azerbaijan.
Russia in 2007 offered to share the Gabala station, which it leases from Azerbaijan, in exchange for the U.S. dropping plans to deploy a radar station in the Czech Republic and missile interceptors in Poland as part of its missile defense systems.
Azerbaijan has close ties to the United States. U.S. Air Force jets en route to Afghanistan refuel at Azerbaijan's main airport and a 90-strong Azeri military contingent has been serving in Afghanistan with NATO-led forces.
Azeri troops were also serving alongside U.S. forces in Iraq until they withdrew at the end of last year.
Several scenarios circulated Wednesday over who was behind the murder of the commander of the ex-Soviet Azerbaijan air force, Rail Rzayev, in the capital Baku.
Gunned down outside his home, Rzayev, 63, was the highest ranking military official to be killed in the oil-rich republic wedged between Russia and Iran.
According to comments made by Akil Alesker, editor-in-chief of Azerbaijan's Yenicag newspaper, to hurriyet.com.tr, intense speculation surrounds three possibilities.
Alesker claims that it is normal for people to suspect that the Armenian secret service is likely to be behind the murder, particularly as the incident came at a time when efforts to solve the frozen Nagorno-Karabakh conflict were being revived.
"The murder of the general will affect the ongoing peace talks regarding the Nagorno-Karabakh conflict to some extent, although there is still no official statement yet regarding who is behind the incident," he added.
Alesker played down claims that Rzayev, who is said to have partners in the food sector, was killed over an argument involving a venture that went out of business due to the economic crisis. Russian media reports claim that Russian arms mafia may have played a role in the shooting, Alesker also said. Rzayev, who opposed to Azerbaijan's purchase of MIG military planes from Russia, persuaded President Ilham Aliyev to cancel the tender, he added.
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