Nato said that 20 Afghan fighters were also wounded in the battle that took place in the Daychopan district of Zabul province on Monday.
Major Luke Knittig, a spokesman for Nato's international security assistance force said that troops are moving into areas where fighters are active in order to increase security so that reconstruction and development can take place.
"What you are seeing in the southern provinces is our troops moving out with a purpose, which is to where we're seeing insurgent activity," Knittig said.
The nationality of the dead Nato soldier has not been released, but there are many American troops operating in Zabul.Nato offensive
Nato and Afghan troops killed 70 suspected fighters who attacked a military base north of Tarin Kowt in Uruzgan on Saturday.
The alliance and Afghan troops fought back for several hours with small arms fire, attack helicopters and airstrikes.
Nato and Afghan troops are pressing ahead with a new joint offensive called Operation Eagle, aimed at keeping pressure on the Taliban through the winter.
The 32,000-strong Nato-led force took command of security operations in all of Afghanistan last month.