In a video broadcast on Aljazeera on Thursday, the group calling itself Martyrs Brigades said they would kill their captive Micah Garen if US forces did not leave Najaf within 48 hours.
"A group calling itself the Martyrs Brigades said they are holding the American journalist Micah Garen. The group threatened to kill the hostage after 48 hours if US forces do not withdraw from Najaf," Aljazeera reported.
The video showed several gunmen surrounding a kneeling captive, thought to be Garen.
The journalist had been seized off the streets of the southern city of Nasiriyah on Friday along with his Iraqi translator. Garen works for New York-based media production company Four Corners Media.
Iraqi groups fighting the occupation have in recent months seized several foreigners suspected of collaborating with the US-led forces.
Though some were released, nine have been killed.
A British journalist James Brandon was captured in the southern city of Basra last week but released later.