According to local media, Caruana Galizia was reportedly killed soon after leaving her home in Bidnija, close to Mosta.
The couple denied the allegations, rejecting accusations they had used secret offshore bank accounts to hide payments from the ruling family of Azerbaijan.
In a statement issued in the aftermath of the explosion, Muscat called the incident "barbaric" and said it "goes against civilization and dignity."
"I condemn, without reservations this barbaric attack on a person and on the freedom of expression in our country," he said in a statement.
"Everyone is aware that Ms. Caruana Galizia was one of my harshest critics, politically and personally, as she was for others, too.
"However, I can never use, in any way this fact to justify, in any possible way, this barbaric act that goes against civilization and all dignity."
It was Caruana Galizia's story on alleged corruption that led to Muscat calling an early election in June -- a vote which he won easily.
Caruana Galizia alleged that Muscat's wife, Michelle, was the owner of a company in Panama and that vast sums of money had been transferred between the company and bank accounts in Azerbaijan.
Both Muscat and his wife denied the allegations.
Caruana Galizia had enjoyed a successful career in journalism, working for several of the major titles in Malta.
She was also widely admired in Europe for her investigative reporting.
Read More: Daphne Caruana Galizia, Maltese journalist, killed in car blast

