Trevor O'Neill was shot outside a supermarket in Majorca just after 21:00 local time on Wednesday, Irish national broadcaster RTÃ‰ reports.
His shooting is understood to be linked to a feud between Irish criminal gangs.
Mr O'Neill's partner and three children, aged five, seven and 10, were with him when the attack happened.
They had travelled to Majorca on Saturday for a holiday for his 40th birthday.
Police believe the attack was connected to a dispute between the Hutch and Kinahan groups, but Mr O'Neill was not the intended victim.
The feud between the gangs was sparked by the killing of Dubliner Gary Hutch in Spain last year and most of the resulting violence and murders have happened in Dublin.
Attempts to revive Mr O'Neill at the scene failed and police are said to be searching for up to three suspects.
It is understood that he was not linked to organised crime but may have been talking to a member of the Hutch family at the time.
An Irishman who was shot dead on a Spanish island is believed to have been killed in a case of mistaken identity in a gang-related attack.