Akihito Saito, 44, was captured after armed fighters ambushed the car he was traveling in west of Baghdad on Sunday, the international security firm Hart said.
The Ansar al-Sunnah group has claimed responsibility for the ambush, saying on its Web site that it killed four foreign contractors and that a fifth, Saito, was seriously wounded.
Hart said it has not given up hope Saito may be alive.
"However, an eyewitness report indicates that wounds sustained at the time of the incident may have proved fatal," the firm said in a statement.
The Japanese government said earlier on Wednesday that it believed Saito was alive.
The US military recovered several bodies in Hiyt, west of Baghdad, but Saito was not among them, a Japanese Foreign Ministry official said.
Saito was part of a convoy escort team providing security west of Baghdad.