Saeed Karimian, 45, was shot dead in the Maslak neighbourhood, along with his Kuwaiti business partner.
The vehicle used in the apparent assassination was later found burnt out. Turkish police are investigating.
Mr Karimian had previously been tried in absentia by a Tehran court and sentenced to six years in prison for spreading propaganda against Iran.
It is understood he died immediately after the gunmen - who were reportedly masked - opened fire on the vehicle on Saturday evening, while his business partner died later in hospital.
Gem TV, which dubs foreign and Western shows into Persian and broadcasts them into Iran, has been criticized by Iran for showing programmes which go against Islamic values and has been accused the channel of spreading Western culture.
Family members told the BBC's Jiyar Gol that Mr Karimian had been threatened by the regime the past three months, and as a result was planning to leave Istanbul and move back to London.
However, sources within the Turkish government have suggested the killing may be related to business and gangs, our correspondent says.
Gem Group was initially established in London, but later expanded to Dubai. According to the group's website, it has 17 Persian-language channels, plus one each in Kurdish, Azeri and Arabic.
|Iranians use satellite dishes in order to watch foreign channels. AFP|
Report: Iranian who ran TV network shot dead in Turkey
DUBAI, United Arab Emirates – A Turkish newspaper is reporting that the Iranian founder of a Farsi-language satellite television network has been shot dead in Istanbul along with a Kuwaiti business partner.
The shooting death late Saturday of Saeed Karimian of GEM TV comes after an Iranian court reportedly sentenced him to prison in March for making "propaganda" against the country.
Turkey's Hurriyet newspaper reported Karimian was shot dead after an SUV blocked off his car and those inside opened fire. The newspaper says the SUV was later found abandoned and burned.
Phone numbers for GEM rang unanswered Sunday.
The private Dogan news agency identified the dead Kuwaiti by the initials M.M. Kuwait's state-run KUNA news agency, quoting the consul general in Istanbul, confirmed a Kuwaiti citizen was gunned down, without elaborating.