Abdel-Rahman Saleh Abdel-Rahman al-Mutab, who was No 4 on the list of the kingdom's 15 Most Wanted suspects, was shot dead on Wednesday north of Riyadh, a security official said, speaking on condition of anonymity because he was not authorised to speak to the media.
Police had been chasing al-Mutab after he escaped from the gun battle in which fellow insurgent Mohammed Abdel-Rahman Mohammed al-Suwailmi, No 7 on the Most Wanted list, was fatally wounded on Tuesday.
The death of the two insurgents brings to 10 the number of people on the Most Wanted list who have been captured or killed.
The latest clash began on Tuesday when al-Suwailmi fired from a car at a police patrol outside the city of Buraydah, northwest of Riyadh, the Interior Ministry said in a statement on Wednesday. He killed two policemen.
He then drove 20km southwest toward the town of Al-Midhnab, where he encountered at a security checkpoint. He opened fire again, killing three more police officers, the ministry said.
Police chased the car and fired at it. Al-Suwailmi was wounded, captured and died later of his wounds, the statement said.
The ministry said a second insurgent escaped by hijacking a woman's car at gunpoint, forcing her and her driver out. The security official said this insurgent was al-Mutab.
The official said he could not immediately give the circumstances in which al-Mutab was killed on Wednesday.
In al-Suwailmi's car, police found six hand-grenades, three Kalashnikov rifles, 17 loaded magazines, five pistols, five faked car license plates, electronic equipment, jewelry, and about 500,000 Saudi rials (about $133,000), the ministry said.
The Saudi authorities initially reported his death in September, giving al-Suwailmi the pleasure of releasing an audiotape on the internet in which he said he was alive and well.
The authorities then said they had mistaken him for his brother, Ahmed, who had just been killed in a shootout with security forces.
The kingdom is waging a campaign against Islamic fighters who have staged numerous terror attacks since May 2003, several of them targeting Westerners employed in the oil industry in a bid to cripple the economy.