The militants shot and killed Ali al-Sayed, the deputy commander of pro-government forces in the town of Jaar, in the southern Abyan province, the officials said on condition of anonymity because they were not authorized to brief the media.
They took photos of his bloodied body and posted them on social media before parading his body through the streets of Abyan's provincial capital, Zinjibar, the officials said.
Al-Qaida in the Arabian Peninsula, or AQAP as the local affiliate is known, has exploited the chaos of Yemen's larger conflict, which pits Shiite Houthi rebels and army units loyal to a former president against the internationally recognized government and a Saudi-led and US-backed coalition.
At least 20 fighters on both sides were killed during the battle for Jaar, the officials said. Al-Qaida then raided the homes of pro-government militia leaders and took people away, local residents told The Associated Press. The residents declined to give their names, fearing reprisals.
More From This Section
"The streets are all empty," a Jaar resident said. "Everyone is hiding at home."
Earlier this year, AQAP captured much of the sprawling southeastern province of Hadramawt and its capital, Mukalla.
The group has also expanded its presence in the southern port city of Aden.
Yemen's conflict has killed at least 5,700 people since March 26, including 830 women and children, the UN said last month. The war has also pushed the country to the brink of famine, and the UN says over 21 million people 80 per cent of the population need humanitarian assistance.
Britain's UN ambassador said today that UN-led talks aimed at ending the conflict will probably take place in Geneva in mid-December.