Rodolfo Illanes and his bodyguard were seized earlier on Thursday at a roadblock in Panduro, south of La Paz, official said.
Interior Minister Carlos Romero said "all indications" were that Mr Illanes had been murdered in a "cowardly and brutal" attack.
Two miners also died from gunshot wounds during clashes with police.
Mr Illanes was beaten to death at about 18:00 local time (00:00 GMT), La Razon newspaper quoted Defence Minister Reymi Ferreira as saying.
The authorities could not for the moment retrieve his body, the minister said. More than 100 arrests had been made, he said.
President Evo Morales had been "profoundly affected" by Mr Illanes's death, Mr Ferreira added.
While he was being held, Mr Illanes told Bolivian radio that a condition for his release was that the government negotiate with miners over new legislation.
The miners have been blocking a highway in Panduro since Tuesday.
The National Federation of Mining Co-operatives of Bolivia, once strong allies of President Morales, began what they said would be an indefinite protest after negotiations failed.
Protesters have been demanding more mining concessions, the right to work for private companies, and greater union representation.

The 21-year-old, who can also play in midfield, scored twice in 33 games after joining Posh from Hartlepool for £500,000 in September 2014.
But he did not figure last season and spent the first half of the campaign with Bradford City, before returning to Pools on loan in February.
James has signed with an option to make the move permanent next May.
He is Darrell Clarke's third new signing of the summer for Rovers, who have won promotion in the last two seasons, following Plymouth Argyle central defender Peter Hartley and Port Vale winger Byron Moore.
"He's only 21 but already has the benefit of over 150 league games behind him," said Clarke. "They sold him to Peterborough for a £500,000 fee and he has since been out on loan at Bradford City and back at Hartlepool.
"I thought he was Pools' best player when they came to The Mem last season. I've watched him on a number of occasions in the last few years. He's always impressed me with his work rate and I believe I can get him scoring goals."
Find all the latest football transfers on our dedicated page.
The Bolivian government says its deputy interior minister has been kidnapped and killed by striking miners.
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Bristol Rovers have signed forward Luke James on a season-long loan from fellow League One side Peterborough United.