The Christmas Day shooting happened as Father Ambrose Mkenda was returning home from his church at around 19:45, Zanzibar police spokesperson Aziz Juma said.
Mkenda was hit in his arm and chest.
As doctors battled to save his life, members of the Christian minority community gathered at Mnazi-Mmoja Hospital in the old town of Zanzibar.
"The injured priest is the head of the Tomondo Catholic Church and also cashier" Aziz Juma said, adding that it was not immediately clear if the attack had been religiously motivated.
"Investigation continues, but it may be also that the attackers thought the priest had money", he said, adding that a pistol had been used in the attack.
This is the second attack on a cleric in recent weeks, but the last one, in November, was an acid attack on a Muslim cleric, who was injured on his face and chest.
Zanzibar's Christian community is a minority there, an estimated three percent of the 1.2 million population, which is almost entirely Muslim.
This latest attack comes few days after unknown people spread leaflets in some streets, calling on the Zanzibar government to release eight jailed Muslim leaders.