Daphne Caruana Galizia, 53, had just driven away from her home in Mosta, a town outside Malta's capital of Valletta, when the bomb went off, sending the vehicle's wreckage spiralling over a wall and into a field.
She revealed that Muscat's wife, Michelle, as well as Muscat's energy minister and the government's chief-of-staff, held companies in Panama by looking into the 2016 document leak.
Muscat, who won power in 2013, and his wife deny they held such companies and sued Caruana Galizia for defamation.
Caruana Galizia started to contribute regular columns to The Malta Independent and was well-known for her direct style of writing.
A half hour before she was killed, she posted to her web site an item about a libel claim the prime minister's chief of staff had brought against a former opposition over comments the latter made about corruption.
Local television reported that Caruana Galizia, who had exposed links between Malta and information contained in the so-called Panama Papers, had filed a complaint to police earlier this month about threats she had received.
Opposition leader Adrian Delia called the killing a "political murder" while observers on social media expressed outraged over the brutal killing.
Caruana Galizia ran a hugely popular blog in which she relentlessly highlighted cases of alleged high-level corruption targeting politicians from across party lines.
Monday evening's Parliament session was scrapped, except for briefings about the bombing given by Muscat and Delia, who called the reporter's slaying a "political murder".
"We will not accept an investigation by the Commissioner of Police, the Army commander or the duty magistrate, all of whom were at the heart of criticism by Caruana Galizia", he said.
Daphne Caruana Galizia, 53, died on Monday when a powerful explosive device blew up her auto, police said. She was also the mother of International Consortium of Investigative Journalists (ICIJ) developer and data journalist Matthew Caruana Galizia.
The Panama Papers refer to the 11.5 million documents that were leaked from large offshore law firm Mossack Fonseca in 2015.
Caruana Galizia had enjoyed a successful career in journalism, working for several of the major titles in Malta.