The imam offered the bounty during Friday prayers as Muslim anger over the cartoons flared anew in parts of Asia.
Weeks of global protests have triggered fears of a clash of civilisations between the West and Islam, and have led to calls on all sides for calm.
On Friday, thousands rallied in Pakistan; police in Bangladesh blocked demonstrators heading for the Danish embassy in Dhaka and in the Indian city of Hyderabad, police fired teargas shells and batons to beat back hundreds of protesters, who had stoned shops and disrupted traffic.
Denmark temporarily shut its embassy in Islamabad citing security reasons, while Pakistan recalled its ambassador from Copenhagen for consultations.
Protests in Pakistan this week have resulted in at least five deaths and hundreds of detentions, and on Friday it became the latest country where Denmark has decided to temporarily close its embassy.
The Danish foreign ministry also issued a travel warning for Pakistan, urging Danes to leave as soon as possible.
"If the West can place a bounty on Osama bin Laden and Zawahiri, we can also announce reward for killing the man who has caused this sacrilege of the holy prophet"
Maulana Yousef Qureshi, Pakistani preacher
In the north-western Pakistani city of Peshawar, Maulana Yousef Qureshi said he had personally offered to pay a bounty of 500,000 rupees ($8400) to anyone who killed a Danish cartoonist, and two of his congregation put up additional rewards of $1 million and one million rupees plus a car.
"If the West can place a bounty on Osama bin Laden and Zawahiri, we can also announce reward for killing the man who has caused this sacrilege of the holy Prophet," Qureshi told Reuters, referring to the al-Qaida leader and his deputy Ayman al-Zawahiri.
Qureshi leads the congregation at the historic Mohabat mosque, on a street known for goldsmith shops in the provincial capital of North West Frontier Province - a stronghold of Pakistan's Islamist opposition parties.
The cartoons were first published in Denmark last September; but last month newspapers and magazines in Europe and elsewhere began republishing to assert principles of freedom of expression.
Muslims believe images of the Prophet are forbidden.
Pakistan's Foreign Ministry said it was recalling its own ambassador from Copenhagen for consultations. It did not elaborate further.
The Danish ambassador in Islamabad said, however, that relations had not been broken off because of the furore.
"I'm still in Pakistan and in a secure place," Bent Wigotski, the ambassador, told Reuters.
Protests in Pakistan have been
large and violent
"There is no question of broken relations or anything like that," he said, adding that the German embassy was looking after Denmark's consular affairs.
Denmark has already shut its missions in Lebanon, Syria, Iran and Indonesia as a result of violence or threats of violence.
Protests in Pakistan have been large and violent and many have taken on a distinctly anti-US tone. Demonstrators, in addition to burning Danish flags, have attacked US fast-food outlets and burned George Bush, the US president, in effigy.
Islamist parties have called for a nationwide strike on 3 March, around the time President Bush is expected to visit Pakistan, despite the unrest.
Appeals for reason
Western leaders have been calling for calm.
Bill Clinton, the former US president, and Jacques Chirac, the French president, both said on Friday that it was a mistake to publish the cartoons.
Clinton, on a private visit to Pakistan, said he saw nothing wrong with Muslims around the world demonstrating in a peaceful way, but he feared a great opportunity to improve understanding had been squandered.
Clinton said he saw nothing wrong
with the Muslim reaction
"This is not a time to burn bridges; this is a time to build them," he said, adding: "I can tell you that most people are horrified that this much misunderstanding has occurred."
Chirac was blunt. "I am appalled by what happened as a result of the publications of these cartoons," Chirac told India Today news magazine which published an interview with him on Friday.
"I am, of course, in favour of the freedom of the press, which is a pillar of democracy. But I am equally for respecting everyone's sensibilities... So I deplore the situation," said Chirac, who visits India next week.