The female jihadi known as the 'White Widow' is believed to have died in an airstrike.
Sally Ann Jones has been the world's most wanted female terrorist for more than three years.
The 50-year-old is understood to have been killed in an American drone strike, near the border between Syria and Iraq.
A source at Whitehall told The Sun said the information had come from CIA officials, who said they were unable to be 100% certain because no DNA had been recovered.
Jones, who has been placed on a no-fly list by the UK and has had her assets frozen by the United Nations, joined Islamic State in 2013 and married Junaid Hussain, a computer hacker from Birmingham who also joined the terrorist group.
After his death in 2015, she became known as the 'White Widow.'
Jones took her then-11 year old son Joe Dixon with her when she relocated to Syria, and it is not known if he was present at the time of the strike.