Shafiul Islam Don was being driven to a police station late Thursday when the Rapid Action Battalion (RAB) vehicle carrying him came under attack by suspected fellow extremists.
The 22-year-old was killed in the gunfight that ensued, local RAB commander Shariful Islam told AFP.
"The attackers opened fire as they tried to snatch Don. We fired back in retaliation," said Islam.
"After a brief gunfight, they fled the scene. We found Don and another person's body from the spot."
Police had arrested Don at the scene of last month's attack at a prayer ceremony marking the end of Muslim holy month of Ramadan.
Three people were killed in the attack in Sholakia town, which came just a week after suspected extremists killed 22 people including 18 foreigners at an upscale cafe in Dhaka.
Islam said he was a member of Jamayetul Mujahideen Bangladesh (JMB), which authorities accuse of being behind a wave of killings of foreigners and religious minorities in recent years.
Islam said Don had confessed in custody to taking part in several recent killings targeting people from religious minorities in the mainly Muslim country.
Police have said a faction of the JMB led by a 30-year-old Canadian of Bangladeshi origin is behind the latest attacks.
Many of its members are drawn from rich families and have vowed allegiance to the Islamic State (IS) group.
Bangladesh Prime Minister Sheikh Hasina has launched a major crackdown on Islamist extremism since the cafe attack.
At least 17 suspected Islamist extremists were killed in the last five weeks and a number of militants were arrested.
Shafiul Islam Don was being driven to a police station late Thursday when the Rapid Action Battalion (RAB) vehicle carrying him came under attack by suspected fellow extremists. Picture courtesy: bdnews24.com
Bangladesh police said Friday a suspected Islamist extremist accused of carrying out a deadly attack on a prayer rally last month has been shot dead in a gunfight while in their custody.
