Gayle Williams, who had been in the troubled country for three years, was killed by two gunmen on a motorcycle as she walked to work in the capital of Kabul.
She recently moved from Kandahar back to Kabul because it was seen as safer. The Taliban claimed responsibility for the shooting, which took place at 08:00 local time. Afghan interior ministry spokesman Zemeri Bashary said Miss Williams had been shot in the body and leg with a pistol.
"Two armed men sitting on a motorbike shot her dead," he said.
"Some bullets hit her body and some hit her leg and when police got there she was dead."
Her body was taken to a nearby hospital.
A Foreign and Commonwealth Office spokeswoman said: "We can confirm that a British national was shot dead in Kabul. Next of kin have been informed."
Mr Bashary said it was not known who was responsible, but Taliban spokesman Zabihullah Mujahid, insisted his militia had carried out the killing.
"We killed her because she was working for an organization which was preaching Christianity," he said.
Serve Afghanistan is a UK registered charity which focuses on education and training for people with disabilities.
All its overseas staff are volunteers. The mission statement on its website says its purpose "is to express God's love and bring hope by serving the people of Afghanistan, especially the needy, as they seek to address personal, social and environmental needs."
Taliban insurgents have increasingly targeted aid workers this year in their campaign to spread an atmosphere of fear and undermine support for the Western-backed Afghan government.
Taliban insurgents killed three female aid workers and their Afghan driver in an ambush just outside Kabul in August, the bloodiest single attack on foreign humanitarian workers in Afghanistan in recent years.
Rising violence has already forced aid agencies to restrict humanitarian work at a time when drought and high prices are putting more people under pressure.
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