Mr Babchenko, 41, was found bleeding at the entrance to his block of flats by his wife and died in an ambulance.
On Wednesday afternoon, however, Babchenko appeared alongside Ukrainian law enforcement on television at a press conference and said that his murder had been staged.
The Ukrainian prime minister, Volodymyr Groysman, said in a social media posting late on Tuesday he was convinced that what he called "the Russian totalitarian machine" had not forgiven Babchenko for what Groysman called his honesty.
Mr Babchenko's wife had earlier said he'd been shot in the back as he left their apartment in the city.
He served in the Russian army during the first separatist war in Chechnya during the 1990s and later became a journalist.
Babchenko thanked the Ukrainian security service for saving his life.
He fled Russia in 2017 after provoking a scandal in a Facebook post that expressed indifference over the deaths of a military choir and other passengers aboard a Russian plane that crashed en route to Syria.
The murder will further strain ties between Ukraine and Russian Federation, post-Soviet allies who fell out following the ouster of Ukraine's pro-Kremlin leader in 2014.
Pro-Kremlin activists unleashed a campaign of harassment against Babchenko, forcing him to flee Russian Federation previous year. Ukrainian authorities released a drawing of the man they suspect is Babchenko's assassin, around 40-45 years old, with a grey beard and wearing a cap. "But, as you see, it suits many people, especially those, like our Ukrainian neighbors, who are taking advantage of the complete impunity coming from their Western handlers".
"I am outraged by this horrific act", OSCE media-freedom representative Harlem Desir said in a statement.