"They captured him in the Liboi area. He's under US protection," the Somali intelligence official told Reuters news agency.
Ahmed is considered a moderate in the movement that was forced out of Mogadishu and southern Somalia by Ethiopian and Somali government forces.
Liboi is a Kenya border crossing near the southern tip of Somalia, where Ethiopian and Somali government troops have been hunting for Islamic courts fighters.
Kenyan officials have said that Ahmed has been flown to Nairobi, the Kenyan capital, and is being held in a hotel.
However, Farih Muallim, leader of the For The Sake Of Kenyan People's Party, ruled out reports that Ahmed was in detention.
"I think that Sheikh Ahmed is in Kenya upon an invitation by the US embassy, as the US ambassador to Kenya said days ago he would like to meet "moderate" figures from the Islamic courts", Muallim said.
Mohammed Adow, Al Jazeera's correspondent in Mogadishu, said Ahmed's political profile could account for his presence in Kenya.
"He is the public face of the Islamic courts and is increasingly being seen as crucial to any national reconciliation effort in Somalia ... this is why, diplomatic sources say, he is being held in a hotel and this is why he is under US protection," Adow said.
An official with the US embassy in Nairobi denied reports that Washington had any involvement in Ahmed's presence in Nairobi.
"Peace is possible if the interests of US and the Ethiopians are removed"
Ahmed, Bossaso, Somalia
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"The United States is not holding or interrogating or protecting Sheikh Sharif," the official told the AFP news agency.
"We were not involved in his capture or surrender."
The United States sees Ahmed as a moderate in the Islamic Courts movement, which formerly vowed to topple the Somali government and extend its system of Islamic law across Somalia.
Ahmed has had previous diplomatic contact with the US. Last September he met Michael Ranneberger, the US ambassador to Kenya.
Ahmed shared the leadership of the Union of Islamic Courts with Sheikh Hassan Dahir Aweys, who was chairman of the court's legislative council.
Some fighters allied to the Islamic Courts have vowed to conduct a guerrilla campaign, and are suspected of carrying out several recent attacks in Mogadishu.
Ethiopian troops came under fire from protesters on Monday as they carried out searches in the south of Mogadishu, Somalia's capital.
At least three civilians were killed in the ensuing gunbattle, according to witnesses.
The searches were being conducted after an ambush on an Ethiopian convoy at the weekend, which resulted in exchanges of fire.