Caceres, a 40-year-old Lenca Indian activist, had complained of receiving death threats from police, soldiers and local landowners because of her work.
Tomas Membreno, a member of her group, the Indian Council of People’s Organisations of Honduras, said at least two assailants broke into the home and shot Caceres in the town of La Esperanza.
“Honduras has lost a brave and committed social activist,” Membreno said in a statement.
The killing appeared to be targeted: A Mexican rights activist at the house was only slightly wounded in the attack, but Caceres’s body had four bullet wounds. Police said they had detained a suspect, but did not identify the person.
Caceres, a mother of four, led opposition to a proposed dam on the Gualcarque river, considered sacred by the Lencas.
Many of the project’s backers have largely abandoned building plans.
President Juan Orlando Hernandez wrote in his Twitter account that “this act has caused mourning among all Hondurans.”
His chief of staff, Jorge Alcerro, said, “The president has instructed all government security forces to use all means to find the killers.”
Alcerro said Caceres was supposed to be receiving special protection because of the death threats, but did not explain why there were no police guarding her when she was killed.
Security Minister Julian Pacheco said police had initially been assigned to a protective detail but Caceres asked for them to be withdrawn because they bothered her.
He said more than two attackers broke down the door of the home to gain entry.
After night fall, dozens of young people protesting the killing set fire to a Burger King restaurant in the capital. The protesters then clashed with police for several hours in the area, throwing sticks and rocks at officers.