The official said today that the body of Ali bin Taher, who ran the Islamic State Army, was found on a farm near the Islamist stronghold of Derna, in eastern Libya.
The official says bin Taher was likely killed last night. His body was riddled with bullets.
The official spoke on condition of anonymity in line with regulations. He says there are no indications as to who was behind the killing.
Bin Taher was freed from prison after the 2011 uprising that ended Moammar Gadhafi's rule.