In his early 50s, Muhammad al-Khatib was among 10 people seized last week after government forces said they foiled a plot to blow up the Italian embassy in Beirut.
The planned attack involved bombing the embassies of Italy and Ukraine - both members of the US-led force in Iraq - and assassinating Western diplomats and targeting security facilities.
Al-Khatib was arrested along with another suspected member of the international network - Ahmad Salim Miqati.
Prosecutor General Adnan Addum said on Wednesday al-Khatib was "the head of al-Qaida organisation in Lebanon".
He had been kept in a secret location, but the hospital where he died - Dahr Al-Bashiq - is situated in the north of Beirut.
In his hometown of Majd al-Anjar in Lebanon's Bekaa Valley near the border with Syria, feelings were running high as hundreds of people gathered outside al-Khatib's house, witnesses said.
Several hundred people began throwing stones and empty bottles at a Lebanese security post at the border, smashing windows, but an army patrol in the area did not intervene.
Protesters challenged the government's assertion that al-Khatib was an al-Qaida man, saying he was illiterate and did not have the means to contact anyone outside the country.
"Ismail was in good health so how could he die of a heart attack. They surely must have killed him," said one resident, who declined to be named.