One woman said she rushed to help the badly wounded American, who pleaded, "I am dying, I need help," the independent Al-Rai Al-Amm newspaper reported.
John Granville, 33, an official for the U.S. Agency for International Development, was being driven home at about 4 a.m. Tuesday when another vehicle cut off his car and opened fire before fleeing the scene, the Sudanese Interior Ministry said.
The diplomat's driver, Abdel-Rahman Abbas, was also killed. Granville, who was hit by five bullets but initially survived, died after surgery, said Walter Braunohler, a public affairs officer at the U.S. Embassy in Khartoum.
Sudanese officials insist the shooting was not a terrorist attack, but the U.S. Embassy said it was too soon to determine the motive. There has been no claim of responsibility, and U.S. and Sudanese officials investigating the shooting have not specified any suspects.
The Sudanese government often drums up anti-Western sentiment in the media. But attacks on foreigners are rare in Khartoum, where a U.S. diplomat was last killed in 1973.
In Washington, the State Department said investigators from its Bureau of Diplomatic Security and the FBI were heading to Khartoum, a routine measure when U.S. officials are killed in uncertain circumstances overseas.
"They will be sending a joint team to Sudan to investigate the murders, collect any evidence they possibly can, work closely with the Sudanese government to determine who is responsible for these murders and bring them to justice," spokesman Sean McCormack told reporters.
He said the Sudanese government had agreed to admit the team, the first members of which will come from U.S. diplomatic missions in the region but will quickly be joined by investigators from Washington.
CBS News correspondent Bob Orr reports that the Sudanese will take the lead in the investigation and the State Dept will be the primary player for the U.S.
The acting U.S. Charge d'Affaires in Khartoum, Roberto Powers, met with Sudanese Foreign Minister Deng Alor to review developments in the investigation. "We are working closely with Sudanese authorities," Powers said.
The Foreign Ministry said Sudanese security services are "working actively to pursue the culprits, identify them and bring them to justice," the official SUNA news agency reported.
The driver's family said the two victims were heading home from a New Year's party at the home of a British diplomat when the attack occurred.
Nimat Malik, a woman who lived nearby, said she rushed to help Granville.
Malik told the Al-Rai Al-Amm newspaper she had some medical training and wanted to try to stop his bleeding using her robes, but others bystanders warned her that she could later face trouble for tampering with evidence.
"But I saw the need to help him so I got the police car to take him to hospital to receive medical assistance," she told the paper.
Maj. Gen. Abdin el-Tahir, the director of criminal investigations, said little material evidence was found at the crime scene. But some witnesses have given information that could help police, he was quoted as saying by the semiofficial Sudan Media Center.
The SMC, which has close links to the government, also cited an unidentified government official as saying the attack was criminally motivated and that there was "no grain of suspicion of an organized terrorist action."
But Braunohler said it was "too early to tell" whether the attack was related to terrorism.
Granville was working to implement a 2005 peace agreement between Sudan's north and south that ended more than two decades of civil war, USAID said.
The shooting came a day after President Bush signed legislation to allow states and local governments to cut investment ties with Sudan because of the violence in the western Sudanese region of Darfur, where more than 200,000 have died in a conflict that began in 2003.
It also came just as a joint U.N.-African peacekeeping force took over control in Darfur. Al Qaeda has called for a "jihad" or holy war against the peacekeepers.
But al Qaeda has shown little overt presence in Sudan since the Sudanese government threw out Osama bin Laden in the late 1990s.
Humanitarian aid workers have come under increasing attack in Darfur by the region's multiple armed groups, but such attacks have not been known to take place in Khartoum, which is reputed to be much safer than other African capitals.
The Darfur conflict is separate from the North-South civil war ended by the 2005 accord that Granville was helping to implement.
Granville, who grew up in Buffalo, N.Y., is the first U.S. diplomat to be killed in Sudan since the 1973 assassination of U.S. Ambassador Cleo Noel, slain along with senior embassy officer George Curtis Moore by the Palestinian Black September militant group.