The Islamic State of Iraq and the Levant (ISIL) group's Egypt affiliate, the Sinai Province, has published a still photo of the beheaded body of a Croatian hostage it had threatened to kill last week, the SITE monitoring service reported.
The photo included a caption that said "killing of the Croatian hostage, due to his country's participation in the war against [ISIL], after the deadline expired".
SITE said the photo was distributed on Twitter on August 12.
A spokesman from the Egyptian interior ministry's press office said: "We have seen this news online but are currently making our own checks.
"If we confirm that it is indeed true, we will inform the media through a statement," he told Reuters.
Last week, an online video purportedly from Sinai Province showed a man who identified himself as Tomislav Salopek who said the group would kill him in 48 hours if Muslim women in Egyptian jails were not freed.
Ardiseis Egypt, a unit of French firm CGG, which specialises in oil and gas geology, said last week one of its staff had been abducted on July 22 while travelling to Cairo.
Croatia's prime minister, Zoran Milanovic, said on Wednesday he was unable to confirm the death of the hostage, but that he feared the worst.
"At this moment we cannot confirm with 100 percent certainty that this is true and I don't know if we will be able to confirm that in the coming days, but what we see does not look good, looks horrible," Milanovic told reporters.
"We will not stop searching [for Salopek] as long as the slightest hope exists," he added.
Swearing allegiance to ISIL
The group holding Salopek was once known as Ansar Beit al-Maqdis, but changed its name to Sinai Province after swearing allegiance to ISIL in November.
The group has also taken responsibility for an attack on the Italian consulate in Cairo last month.
Several attacks by Sinai Province claimed the lives of civilians, policemen and soldiers in the past few months.
Last month, Sinai Province claimed responsibility for a rocket attack on an Egyptian naval vessel near the coast of Israel and Gaza, less than a week after claiming the bombing that heavily damaged the Italian consulate.
Fighters loyal to ISIL have killed hundreds of policemen and soldiers since the army overthrew President Mohamed Morsi in 2013.