Wayne Goddard was rushed to hospital after being shot at his home near the south-eastern city of Canindeyú last Tuesday but medics were unable to save him.
In a statement to supporters, relatives said: "He was a faithful man of God and will be dearly missed.
"We are very thankful for the precious memories that we have with him as well as the time this past Christmas holiday, where Wayne participated and we could also celebrate his 50th birthday.
"We know that he is with our Saviour, which has strengthened our hearts and has given us courage to continue moving forward."
A third generation missionary, the 50 year old American was raised in Paraguay. Wayne had been serving the Ava Guaranà and Pai Tavyterã tribes for more than 25 years.
He had been working with the international mission agency Ethnos360 and a local partner, Misión a Nuevas Tribus en el Paraguay, since 1994.
The statement also said: "Please pray for us as we walk through these difficult events, and especially remember Wes and Robert Goddard Jr (Wayne's brother and father)."
According to local authorities cited by Fox News, one suspect is in custody in connection with the killing and investigations are ongoing.
Premier reported earlier this month how police were investigating the death of Paul McAuley, a British missionary in Peru.
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