The rights group said Monday's gunning down of top regional Tamil Tiger leader, E. Koushalyan and five others in his vehicle underscored the need for all sides to address human rights concerns in Sri Lanka's faltering peace bid.
"These killings are particularly disturbing as they may signify a dangerous new round of politically motivated violence," said Brad Adams, Asia director of Human Rights Watch.
"This kind of violence and intimidation undermines the ceasefire and hinders the post-tsunami relief and rehabilitation work going on right now."
The rights group welcomed the Sri Lankan government's condemnation of the killings, but said Colombo must do more to investigate the murders by appointing a commission of inquiry.
No one has claimed responsibility for the killings, but the Tigers have accused "paramilitary" groups operating allegedly with military backing.
"In light of a possible complicity by government forces, the government should immediately establish a commission of inquiry into the deaths and ensure that proceedings and conclusions are credible and transparent," Human Rights Watch said.
It said the Norwegian-led truce monitors in Sri Lanka must also investigate the killing and strengthen their human rights monitoring capability.
"Failure to do so would affect its credibility and engender mistrust from the very population it is meant to protect," Adams said.
While LTTE officials were the victims in the latest killing, the Tamil Tigers have also been carrying out politically motivated killings with impunity, Adams said.
Since November there have been numerous murders and attempted murders of LTTE members, as well as assassinations and abductions of the rebel group's opponents and critics.
"For the ceasefire to work, all involved parties, including the international community, must take stronger steps to ensure that human rights protection is a major part of the process," Adams said.
The Sri Lankan government and the Tamil Tigers have been observing a truce since February 2002 although peace talks have been on hold since April 2003. More than 60,000 people have been killed in Sri Lanka's ethnic conflict between 1972 and 2002.