Ahmad Wali Karzai, a controversial but key figure in Nato’s battle against the Taliban, was gunned down at home by his bodyguard on Tuesday.
The weeping president climbed into the grave to kiss his brother’s forehead before appealing to Taliban militants to stop their violent uprising.
Reports suggest an explosion hit an official car after the funeral.
Security was tight, with helicopters overhead and many troops deployed.
Karzai was shot twice by his family friend and long-time head of security, Sardar Mohammed, who was himself killed almost immediately, in an attack claimed by the Taliban as one of their top achievements in 10 years of war.
Bus-loads of mourners followed the body from the provincial governor of Kandahar’s compound to his family village of Karz, some 20km (12 miles) away.
At the graveside, Hamid Karzai wept and kissed his dead half-brother’s face as senior politicians looked on, before appealing to the militants to stop the bloodshed.
“My message for [the Taliban] is that my countryman, my brother, stop killing your own people,” said Mr Karzai. “It’s easy to kill and everyone can do it, but the real man is the one who can save people’s lives.”
Tuesday’s killing was the latest and most high-profile in a series of assassinations of senior politicians and security commanders across the country.
Ahmad Wali Karzai in April talking about death threats against him in the BBC documentary Afghanistan: The Unknown Country
It has raised questions about how to ensure the security of Afghanistan’s top officials, while leaving a political vacuum in the country’s south that many fear will play into Taliban hands.
“The reality in the south is that we have the drug problem, we have the insurgency problems, we have weak governance and we have a disaffected population,” said former MP Daoud Sultanzoy.
“So when you look at all these things, the mishmash of capabilities of one person to deal with all these things is a very, very important trait in anybody who can come and fill this void.”
Ahmad Wali Karzai could be replaced by one strong figure connected to the local tribal elite – possibly another of the president’s brothers – or several bureaucrats, Mr Sultanzoy told the BBC’s World Today programme.
Sleeper agent killer?
Questions are being asked about how Kandahar’s Mr Fix-it had his own security compromised, says the BBC’s Quentin Sommerville in Kabul.
The Taliban say the killer was a sleeper agent, and that their intention was to make it more difficult for the Afghan government to exert control over the restive region.
Recent Afghan assassinations
28 May: Gen Mohammad Daud Daud, police commander for northern Afghanistan, killed in provincial governor’s compound in Takhar
15 April: Khan Mohammad Mujahid, police chief of Kandahar province, killed in attack on police HQ
13 April: Pro-government tribal elder Haji Malik Zarin killed in attack in Kunar province
10 March: Abdul Rahman Sayedkhili, police chief of Kunduz province, killed in Kunduz city
29 Jan: Abdul Latif Ashna, deputy governor of Kandahar province, dies in attack on convoy in Kandahar city
7 Jan: Border police commander Haji Ramzan Aka killed in Spin Boldak
While the bodyguard’s motives remain unclear, it seems unlikely that someone so close to the Karzai family was working for the insurgents, says our correspondent. Ahmad Wali Karzai stood accused of many things, from drug trafficking to large-scale corruption.
He had many enemies beyond the Taliban, and others in a criminal network may be to blame for his death, our correspondent adds.
Critics said Ahmad Wali Karzai was a warlord mired in corruption who was openly involved in the drugs trade and had a personal militia at his disposal.
His supporters saw him as a defender of Pashtun rights. The president repeatedly defended him, denouncing accusations that his brother was involved in criminal activities.
It is hard to overstate how important Ahmad Wali Karzai was in the south of Afghanistan and in Nato’s efforts to combat the Taliban in their stronghold there, says our correspondent.
As head of the Kandahar Provincial Council, Ahmad Wali Karzai was a staunch ally of US and allied forces in Afghanistan – to the extent that they turned a blind eye to accusations he was involved in drug-trafficking, he adds.