Khalaf said al-Masri was apparently killed in a battle near a bridge in the town of al-Nibayi, north of Baghdad.
He said that Iraqi authorities did not have al-Masri's body.
Another interior ministry source said Masri had been killed.
A US military spokesman could not confirm the report, and said that several previous reports of Masri's death were found to be false.
"I hope it's true, we're checking, but we're going to be doubly sure before we can confirm anything," said Lieutenant Colonel Chris Garver.
In March, Iraqi media reported that Masri had been wounded in a shootout with Iraqi soldiers, but the information proved unfounded.
US officials say Masri, who is allegedly also known as Abu Hamza al-Muhajir, is an Egyptian who specialises in car bombings.
He has allegedly headed al-Qaeda’s operations in Iraq since the death of then-leader Abu Musab al-Zarqawi in a US air-raid in June 2006.