Sources said the incident took place when Sardar Abdul Aziz Umrani was about to leave his residence for a market.
The PML-N leader received several bullets and died on the spot.
Law-enforcement personnel took the body and the injured to the civil hospital.
One of the injured guards died in the hospital. He was identified as Zafar.
A police official said the matter was under investigation but added that old enmity might be the cause of the attack.
Bazaars in the town were closed after the incident.
PML-N supporters took out a procession in protest against the murder of their leader.