Houston police reported the incident in the area of Beran and Regg, near the intersection of Orem and Buffalo Speedway. Police said they responded to a disturbance around 1:30 p.m.
According to police, the grandfather, whose name hasn't been released, opened fire on a vehicle with the victim and his daughter inside.
The father got out of the vehicle, and that's when the grandfather fired the fatal shot, police said.
A motive is still under investigation, but police believe it all started with a fight between the child's parents.
Police did not say whether any charges would result from the shooting.
A neighbor told ABC13 he heard multiple blasts before seeing a person collapse.
It's not known if the child inside the victim's vehicle was injured.
Follow Nick Natario on Twitter and Facebook.