prue was killed Von the Quelle his assassin shax he used his power and hit prue (and piper) true a Wand and Du can see her head bleeding in that episode
In Season 3 Shax killed Prue Von throwing her through the Wand after she tried to save Dr.Griffith. Piper and Prue were both thrown back into the Wand to save Dr. Griffith but Leo came back to save them and before that. Phoebe was in the Underworld with Cole and Leo. Phoebe asked the Quelle to call Tempus to turn back time but it was to late when they got back to save Piper and prue. Leo came back to save Piper and Prue the Sekunde time and saved Piper but not Prue because she was already dead.
In season the season 3 finale, prue,piper and phoebe couldn't stop shacks, (please not that this is towarads the END of the episode) shacks died but he had killed prue.
prue died Von a lighting blast thrown through an Wand Von the sources assistant shax in theseason 3 finale episode all hells breaks loose and her funeral was shown in the 4th season premiere two parter episodes Charmed – Zauberhafte Hexen again part 1 and 2
In the last episode on season 3 (all hell breaks loose) Prue and Piper are injured Von Shax, a personal assassin for the Source. Leo can only heal one so he naturally chooses Piper, his wife. So in summary she was murdered Von Shax. In reality she kept causing fights between the Schauspielerinnen who play Piper and Phoebe so everyone got sick of his and they threw her off.