President Hamid Karzai cut short a visit to the U.S. over the attack, which dealt a harsh blow to peace efforts after a decade of war.

The turban bomber entered Rabbani’s house in the capital Kabul today evening and blew himself up inside, said Mohammad Zahir, the chief of criminal investigation for the Kabul police.

Rabbani headed the country’s High Peace Council, which was set up by the Afghan government to work toward a political solution to the decade-long war. However, it had made little headway since it was formed a year ago.

Rabbani was president of the Afghan government that preceded the Taliban rule. After he was driven from Kabul in 1996, he became the nominal head of the Northern Alliance, mostly minority Tajiks and Uzbeks, who swept to power in Kabul after the Taliban’s fall. Rabbani is an ethnic Tajik.

His killing dampens hopes of starting peace negotiations with Taliban insurgents and also will hamper efforts to keep regional and ethnic rivalries, which feed the insurgency, in check.

As one of the wise old man of Afghan politics and the leader of the anti-Taliban Northern Alliance, Rabanni’s role in the attempts to reach out to the Taliban and seeking a political deal with them — with the U.S. blessing — will be hard to replicate in the near future.

His death could unleash a well of resentment building up among some senior Northern Alliance members, who accuse President Hamid Karzai of colluding with the Taliban.

Already Afghanistan’s ethnic minorities have begun to re-arm in the face of negotiations with the Taliban. Rabbani’s death is likely to accelerate the re-arming and lay the foundation for a bitter civil war once U.S. troops leave the country in 2014.

Karzai’s adviser Mohammad Masoom Stanekzai was wounded in the attack. A relative who answered Stanekzai’s phone said that the wounds did not appear to be life-threatening, but Stanekzai was in the hospital. The relative declined to give his name because of the sensitivity of the situation

Stanekzai is chief executive of the Afghanistan Peace and Reintegration Program, a highly touted program funded by the U.S. and its coalition allies to bring mid- and lower-level Taliban back into Afghan society. The program has so far only managed to reintegrated about 2,000 of the estimated 25,000-40,000 insurgents in Afghanistan.

Reintegration was the other half of reconciliation, which is aims to try and broker a peace deal with the senior Taliban leadership.