Brigadier General Adel Ragaei, who commanded an armored division deployed in the Sinai, died in a hail of bullets on Saturday, as he left his home in the Obour City suburb, according to his sister-in-law Huda Zein Elabedine.
Fighters in Egypt have killed hundreds of policemen and soldiers, mostly in the Sinai Peninsula, but such attacks on senior officers are rare.
"At 6am (04:00 GMT) they killed him. I can't tell you if it was six or 12 bullets. It was before he could get into his car," Elabedine said.
According to media sources close to Al Jazeera, Ragaei oversaw the destruction and flooding of tunnels that ran into the Gaza Strip under the Rafah border, which provided a lifeline for residents of the besieged territory.
An armed group called Liwa al-Thawra claimed the attack, in a message posted on Twitter, but the message has yet to be independently verified.
The largest Arab country is currently battling several armed groups mainly concentrated in the Sinai Peninsula and which gained pace after the military coup that ousted Mohamed Mursi, the country's first democratically elected president.
The campaign, which has included the Egyptian branch of the Daesh (ISIL) group, has killed hundreds of soldiers and police.
One group, which calls itself the Hasam Movement, has claimed several attacks in or near Cairo, including the assassination of a police officer and the attempted killing of a senior prosecutor.
The attacks have dented the recovery of tourism after a 2011 uprising drove away tourists, a major source of hard currency.
Import-dependent Egypt is facing a shortage of foreign exchange that has stifled business activity and hit confidence in the economy.