Piero Parolari, 78, has been working in the city of Dinajpur for 12 years as a medic at St Vincent Hospital missionary hospital. He has lived and served in Bangladesh for more than 25 years in total.
Locals rushed Fr Parolari to hospital, before he was moved to a specialist hospital in the Bangladeshi capital Dhaka.
The gunmen escaped and arrests are yet to be made. It's unclear who the perpetrators were, with some saying Islamic State have claimed responsibility and others saying anti-government rebels are to blame.
Fr Parolari is the second priest and third person working in a Christian capacity to have been attacked in Bangladesh in the last three months
A Bangladeshi priest, Fr Luke Sarkar, was stabbed at his church in the town of Pabna in October. He has now made a full recovery.
And Italian aid worker Cesare Tavella was shot dead in September working for a Netherlands-based church cooperative in Dhaka. Four people have been arrested in connection with the 50-year-old's murder.
Another Japanese citizen, Kunio Hoshi, was shot dead in the province of Rangpur in October, while a suicide bomb went off at a Shia mosque, killing one and injuring 80 a few weeks later.