The 26-year-old, who goes by the name of Abou Ossama Al-Faranci in the Internet video, left the village of some 1,400 people five years ago, residents told the newspaper La Depeche du Midi.
Serge Lafon, the mayor of Labastide-Rouairoux, told AFP that "many villagers knew and recognised him".
"They are quite sure and there's been no denial by relatives or anyone so there's a 99 percent chance it is him."
The bearded blue-eyed man seen in the footage urging Muslims to stage attacks in France was reported to have gone to school in the village and have converted to Islam, studying the Koran in a Muslim centre in a private home.
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The Depeche du Midi daily said the man was thought to be married with two children. After moving to the southern city of Toulouse, he "left for Syria... about a year ago", it said.
French prosecutors on Thursday opened an investigation into the video showing the three Frenchmen. A source close to the inquiry said the trio had been identified.
A week ago another Frenchman, 22-year-old Maxime Hauchard, appeared in a grisly IS execution video.
Around 1,000 people from a wide range of backgrounds have left France to join jihadists in Iraq and Syria, with some 375 currently there.
In all, some 3,000 Europeans are believed to have left their homes to fight on those fronts, according to the European Union's anti-terrorist coordinator.