Citing a 'military source,' Amaq said Shishani was killed 'in the town of Sharqat as he took part in repelling the military campaign on the city of Mosul' (in picture), referring to the last IS-held city in Iraq.
A top Islamic State group commander, Omar al-Shishani, has been killed in Iraq, the jihadist-linked Amaq agency said on Wednesday.
The Pentagon announced in March that Shishani, known as Omar the Chechen, was believed to have died of injuries received in an air raid targeting his convoy in northeastern Syria, details at odds with Amaq's account.
Citing a "military source", Amaq said Shishani was killed "in the town of Sharqat as he took part in repelling the military campaign on the city of Mosul", referring to the last IS-held city in Iraq.
Iraqi forces are conducting operations to set the stage for a final push to Mosul, the country's second city that fell to IS in June 2014.
Sharqat lies on the road north to Mosul, but Iraqi forces recently bypassed the area to recapture a key military base in the Qayyarah area farther north that the Pentagon said will be a "springboard" for the push toward the city.
Amaq did not specify when Shishani was killed, but the loss of the commander is a blow to the jihadist group, which has suffered a string of setbacks in Iraq this year. In addition to Shishani, the US announced that it had killed IS deputy leader Abd ar-Rahman Mustafa al-Qaduli in March.
Shishani, a fierce, battle-hardened warlord with roots in Georgia and a thick red beard, was one of the most notorious faces of IS. Shishani, whose nom de guerre means "Omar the Chechen", was one of the IS leaders most wanted by Washington, which had put a $5 million bounty on his head.
His exact rank was unclear, but a US official had branded him as "equivalent of the secretary of defence" for the jihadist group.
Shishani came from the former Soviet state of Georgia's Pankisi Gorge region, which is populated mainly by ethnic Chechens.
He fought as a Chechen rebel against Russian forces before joining the Georgian military in 2006, and fought Russian forces again in Georgia in 2008.
He later resurfaced in northern Syria as the commander of a group of foreign fighters, and became a senior leader within IS.
IS overran large areas north and west of Baghdad in 2014 but has since lost significant ground to Iraqi forces backed by US-led air strikes, training and other assistance.
Baghdad declared victory in the city of Fallujah, west of Baghdad, at the end of last month, leaving Mosul as the sole Iraqi city held by IS.
The Sunni extremist group has responded to the battlefield setbacks by striking civilians, particularly Shiites, and experts have warned there may be more bombings as the jihadists continue to lose ground.