Abu Islam al-Shishani was the second foreign jihadist to be killed this week since the military launched its latest offensive on Al-Qaeda in the Arabian Peninsula (AQAP).
News of his death came as officials blamed AQAP for a suicide bombing at an intelligence post that wounded two guards, and after gunmen killed an army officer in Aden.
AQAP, regarded by the United States as the global jihadist network's most dangerous franchise, has been the target of an intensifying drone war this year that has killed dozens.
Shishani was killed "during military operations... against terrorist elements in Abyan" province, said a statement posted on defence ministry website 26sep.Net.
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He had reportedly fought against Russian forces in Chechnya before moving to Yemen to join AQAP, a merger of the network's Yemeni and Saudi branches.
Yesterday, the defence minister announced that local jihadist commander Abu Muslim al-Uzbeki had been killed in clashes, also in Abyan province.
A security official said Uzbeki travelled in 2011 from Uzbekistan to Yemen, where he was named an AQAP leader in Abyan.