As reported by the separatist propaganda and media, the explosion occurred as a result of the detonation of powerful improvised explosive device.
Russian President Vladimir Putin lauded Zakharchenko, who was 42, as "a true people's leader" and promised Donetsk residents that "Russia always will be with you".
Moscow, Sep 1 The death of a pro-Russian separatist leader in the conflict-ridden eastern Ukraine could serve to escalate tensions in the region and impede the so-called Minsk peace process, a Kremlin spokesperson said on Saturday.
Russia's Foreign Ministry had every reason to believe Kyiv was responsible for Zakharchenko's death, ministry spokeswoman Maria Zakharova said on the Rossiya-24 state television station.
Ukrainians suspected of being behind the blast were arrested nearby, a security source was quoted as saying.
Alexander Zakharchenko, the leader of pro-Russian rebels in Donetsk, was killed Friday in a bombing at a restaurant where he was having dinner.
Zakharchenko, a native of eastern Ukraine who had worked in the region's mines, put a local face on the 2014 rebellion by replacing a Russian citizen. "Having failed to fulfill the promise of peace, apparently they chose to turn to a bloodbath". His bodyguard was also killed and 12 more people were injured.
Businessman-turned-warlord Zakharchenko, who commanded rebels fighting Ukrainian government forces in the mining and industrial town of Donetsk, was elected first president of the unrecognised republic in 2014.
She said the killing was a result of "internal fighting. between the terrorists and their Russian sponsors".
Alexander Zakharchenko, the "head of state" and prime minister of the unrecognised Donetsk People's Republic, was fatally injured at a café in the centre of Donetsk, the rebel capital.
Policemen block traffic close to the site of the murder of Alexander Zakharchenko in Donetsk on Friday.
A spokeswoman for the Ukrainian Security Service, Elena Gitlyanskaya, said "The Ukrainian special services don't have any kind of connection to this".
Zakharchenko, who liked to be seen wearing khaki military fatigues, sold his business to finance the rebels and took part in the storming of the Donetsk regional administration building that launched the conflict in 2014. A vote held by separatists confirmed him in office.