Radwan Taleb al-Hamdouni, whom the sources described as the radical militant group’s leader in Mosul, was killed with his driver when their car was hit in a western district of the city on Wednesday afternoon.
The ultra-hardline Islamic State swept through northern Iraq in June almost unopposed by the Iraqi army, consolidating gains made in the country’s Sunni heartland region of Anbar.
Hamdouni was buried later on Wednesday. Large numbers of supporters, some carrying black Islamic State flags, attended the funeral, one source said.
Two U.S. officials said they were unable to confirm whether Hamdouni had been killed.
Hamdouni had been the Islamic State ‘wali’, or governor, of Mosul, which was captured by the group in June and is the largest city in a self-declared Islamic State caliphate straddling the border between northern Iraq and eastern Syria.
Islamic State leader Abu Bakr al-Baghdadi chose a mosque in Mosul to deliver a sermon in July, his only appearance since he assumed the title of caliph, or Muslim leader.
Sources in Iraq said two weeks ago that he had been wounded in an air strike. The movement later released a defiant audio statement by Baghdadi.
A senior Iraqi official told Reuters earlier this month that Mosul was the focus of government efforts to defeat Islamic State, because of the city’s size and symbolic status after Baghdadi’s speech there.
The United States launched air strikes against the group in Iraq in August, later expanding operations to targets in Syria.
The air campaign helped Kurdish forces retake territory from the group in Iraq and defend the Syrian border town of Kobani from an ongoing IS offensive.
Islamic State fighters faced another setback this week when Iraqi officials said they had broken a five-month siege of the Baiji oil refinery, Iraq’s largest, on Tuesday.
But militants continue to strike across the country.
A suicide bomber blew up a lorry on a bridge near the western city of Ramadi on Thursday, killing at least five people, a local official said.
Countries in the U.S.-led coalition fighting Islamic State will meet in Brussels in early December, a NATO official said.
While some of NATO’s 28 members are taking part in air strikes, the alliance has limited its role to coordinating assistance for Iraq.