Farzana Parveen, 25, had been due in court to defend her husband against kidnapping and forced marriage allegations made by her family.
"Farzana was here to tell the court that she married of her own choice," her lawyer, Rao Mohammad Kharal said.
According to police, nearly 20 members of the woman's family, including her father and brothers, attacked her and her husband with batons and bricks before a crowd of onlookers in broad daylight.
"The brother first opened fire with a gun but missed. She tried to run away but fell down," senior investigator Rana Akhtar said.
"The relatives caught her and then beat her to death."
"Farzana died on the spot after suffering critical head wounds," police spokesman Niyab Haider said "while her husband managed to escape the attack".
Parveen's father surrendered after the incident.
"I killed my daughter as she had insulted all of our family by marrying a man without our consent, and I have no regret over it," an investigator quoted him as saying.
Police say they're working to arrest others who participated in the act.
Many Pakistani women have no say in who they marry and disobeying the wishes of relatives is believed to bring shame on the whole family.
The Human Rights Commission of Pakistan says 869 women died last year in so-called "honour killings", though public stonings are extremely rare.
"Such crimes persisted because of the impunity enjoyed by the killers," the Commission said in a recent report.
Other Pakistanis who monitor violence against women have expressed shock at the brutal and public nature of the alleged killing.
"The most shameful and worrying thing is that this woman was killed in front of a court," said Zia Awan, a prominent lawyer and human rights activist.
He said Pakistanis who commit violence against women are often acquitted or handed light sentences because of poor police work and faulty prosecutions.
"Either the family does not pursue such cases or police don't properly investigate. As a result, the courts either award light sentences to the attackers, or they are acquitted," he said.
Farzana Parveen's body had been handed over to her husband for burial. She was three months pregnant.
