The letter was issued on behalf of Richard Granger, former NHS IT director-general, said Hislop, who is 'a legitimate target of inquiry for journalism' not 'part of a leg-over case'.
"Just my journalist asking questions, [and] bang, in come the lawyers - this is a chilling wind," he said.
The notion that privacy law 'is only indulged by frothy celebrities' is wrong, said Hislop.
"As soon as the celebrities make a bridgehead, the rich and the powerful come in behind," he said.
Calls for prior notification by a publication is worrying as it increasingly carries the threat of an immediate injunction, said Hislop, who described this as 'censorship by judicial process'.
Around one injunction preventing publication of story on the grounds that it would breach privacy law is received by Private Eye a fortnight, said Hislop.
"The cliché is that privacy is the new libel (...) if you want to shut people up, privacy is the way you go about it now," he added.
"Libel is a big issue, because as soon as you get one [action against your title] now, the costs will probably cripple you.
"Privacy law has evolved and has largely been determined by the judges. If we're going to have a privacy law or not, or tinker with it, then parliament is where this should be happening. I don't think this should just be left to judges tinkering with the Human Rights Act."
More news from the select committee hearing on press standards, privacy and libel: