Firdous Khan was killed in an hour-long gunfight with police in the Manghopir neighbourhood of the country's biggest city Karachi, said Usman Bajwa, a senior official in the Crime Investigations Department.
Bajwa said Khan was the mastermind of the devastating bombing near Bhutto's truck at a political rally during her Pakistan homecoming parade in October 2007.
Bhutto survived the attack but was assassinated two months later in a gun and suicide bomb attack at a rally in Rawalpindi.
"Firdous Khan was a Taliban commander who acted as a facilitator and trained the suicide bomber and later took him to the target," said Bajwa.
The then-administration of military ruler Pervez Musharraf blamed the assassination on Pakistani Taliban chief Baitullah Mehsud, who denied any involvement. He was killed in a US drone attack in August 2009.
Bajwa said the shootout took place between Monday night and Tuesday morning.
Other militants escaped during the exchange of fire by taking  advantage of the darkness, he said.
Karachi, a city of 18 million people which contributes 42 percent of Pakistan's GDP, has been plagued by sectarian, ethnic and political violence for years.
The city is also racked by militants, especially the Taliban.
More than 7,000 people have been killed in the insurgency by the Tehreek-e-Taliban Pakistan since it began in 2007, according to a tally.

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