A security official said Abd al-Rahman Muhammad Muhammad al-Yazji was killed when police raided an apartment in the southern Riyadh district of al-Sinaiya on Wednesday.
Two other insurgents and a member of the security forces were killed, the official added.
Al-Yazji is number 25 on the country's list of 26 most wanted insurgents. His death means the government has killed or arrested 24 of the listed suspects.
The morning raid came hours after security forces ended a three-day battle with a group of insurgents in the desert town of al-Ras, 355km northwest of Riyadh, in which 14 rebels were killed.
The confrontation is the longest fight the kingdom has seen in its crackdown on armed opponents.
The Interior Ministry said 14 insurgents had been killed and six arrested since Sunday, and that forces retook the compound in the town's al-Jawazat district, but gave no details on how.
Once the standoff was over, some forces withdrew, while others combed the compound, looking for booby traps and weapons, and collecting documents, the official said.
Bombs, weapons and ammunition were found at the villa, al-Harithi said.
Among the dead from the fight at al-Ras were two insurgents thought to be the number four and number seven figures on Saudi Arabia's most wanted list - Moroccan Karim al-Mujati and Saudi Saud Hamud Ubaid al-Utaibi - a senior military official in al-Ras said.
Crown Prince Abd Allah says the
insurgents are terrorists
The battle began on Sunday morning when security forces, acting on a tip-off, arrived at another building in al-Jawazat.
Insurgents opened fire with automatic rifles and grenades, sparking a clash with police that killed three fighters. The remainder fled to the villa, where they holed up on Monday with an arsenal of weapons.
During the shootout, one fighter surrendered and two others were wounded and captured.
Al-Harithi said he could not confirm the killing of Salih al-Aufi, al-Qaida chief in Saudi Arabia.
"We have to wait for an official statement from the Saudi Interior Ministry," he said.
He added that only two out of the list of 26 wanted suspects were still at large.
"The list of the wanted suspects comprised professionals who got trained in military camps in Afghanistan and other places," al-Harithi said.
Saudi Arabian newspapers carried profiles of the two wanted insurgents. Al-Mujati, the Moroccan, is said to be a battle-hardened fighter who had fought in Afghanistan and is described as a supporter of al-Qaida leader Usama bin Ladin.
Saudi special forces were said to
have taken part in the standoff
The papers said al-Mujati had helped plan the May 2003 bombings in Casablanca that killed 33 bystanders and 12 bombers.
He was one of the top five remaining insurgents at large, after the capture or killing of 21 others.
Al-Utaibi is said to be one of two Saudi fighters running al-Qaida's branch in Saudi Arabia. Last year, he purportedly posted an internet statement rejecting an amnesty offered by Saudi Arabian ruler King Fahd who promised insurgents that their lives would be spared if they surrendered.
The Saudi government's opponents say the monarchy is dictatorial, corrupt and beholden to the West.
The monarchy says the insurgents have little support and are trying to create chaos inside the kingdom.