The man, in his twenties, was gunned down in his car beneath an overpass in the third arrondissement of Marseille at around 3.30am on Thursday.
Deputy Prosecutor Dominique Auter said the man died from "several kalashnikov shots to the chest" adding that the shooting was "certainly a settling of accounts".
The victim has been identified, but the attacker remains on the run.
One potential witness in the area was taken in by police for questioning.
The shooting marks the first homicide of the year for Marseille, and comes just days after a Jewish teacher survived a machete attack.
The attack comes as Interior Minister Bernard Cazeneuve is scheduled to visit the city.
After a spate of violent crimes in the city late last year, Cazeneuve called for a nationwide crackdown on weapons in the coming weeks, saying: "There is always too much violence in this city".
Police figures from 2012 revealed that a third of all murders in France that year were in the Marseille region.