The shooting occurred inside a police compound in Kabul, the NATO-led International Security Assistance Force told CNN.
The killing is the latest insider attack targeting foreign troops, carried out by Afghan soldiers and police, or militants dressed like them, but it's believed to be the first carried out by a woman.
The woman, identified as Afghan police Sgt. Nargas, approached the contractor as he was walking in the heavily guarded police chief's compound in Kabul. She then drew a pistol and shot him once, a senior police official told Reuters.
Local media reported that the victim was a U.S. military adviser for Afghan police, but NATO and Afghan officials did not confirm the victim’s nationality or the nature of his job.
The suspect has been detained, and officials said she may have links with the Taliban.
The shooting came a day after at least five Afghan policemen were killed by their own commander in the remote Khosh Tepa district in northern Jawzjan province.
The NATO-led missions in Afghanistan were suspended Sept. 18, for almost two weeks, following a rise in the so-called “green-on-blue” attacks.
“Green-on-blue," is a color-coding system used by the military, in which blue signifies the friendly force and green represents allied forces, to indicate insider killings in the U.S. and NATO troops in Afghanistan.
More than 50 members of the NATO-led forces in Afghanistan have been killed in insider attacks this year.
The last of the 33,000 U.S. "surge" troops sent to Afghanistan nearly two years ago to contain the Taliban insurgency withdrew in September, even as the U.S. military deaths in the 11-year war hit the 2,000 mark.