Five suspected Al-Qaeda members, including a commander with Chechen links, and two soldiers were killed Saturday in an army offensive against jihadists in the south, Yemeni officials said.
The defence ministry named the foreigner as Abu Islam al-Shishani, the second foreign jihadist reported killed this week.
"Four Al-Qaeda fighters were killed and nine wounded" in clashes with soldiers in Abyan province, a military source on the ground told AFP.
During fighting in the Sanaj region between Maajala and Wadi Dheiqa, an al-Qaeda bastion, "two soldiers were killed and four more wounded", the source said.
The defence ministry said Shishani was killed in Maajala.
The deaths come as the military presses its latest offensive against Al-Qaeda in the Arabian Peninsula.
AQAP, regarded by the United States as the global jihadist network's most dangerous franchise, has been the target of an intensifying drone war this year that has killed dozens.
In a video posted online Saturday, the AQPA chief for southern Yemen, Jalal Belaid al-Marqashi, said the army offensive amounted to a "crusade" ordered by the Unites States.
"We are fighting the enemy along with tribesmen who condemn the American raids and the savage army offensive," he said.
News of Shishani's death came as officials blamed AQAP for a suicide bombing at an intelligence post that wounded two guards, and after gunmen killed an army officer in Aden.
On Friday, another AQAP leader, Qassem al-Rimi, threatened to strike back at any party involved in the drone campaign and denied that foreigners made up the bulk of the group's jihadists.
Shishani was killed "during military operations... against terrorist elements in Abyan" province, said a statement posted on the defence ministry website 26sep.net.
He had reportedly fought against Russian forces in Chechnya before moving to Yemen to join AQAP, a merger of the network's Yemeni and Saudi branches.
On Friday, the defence minister announced that a foreign jihadist commander, Abu Muslim al-Uzbeki, had been killed in clashes in Abyan province.
A security official said Uzbeki travelled in 2011 from Uzbekistan to Yemen, where he was named an AQAP leader in Abyan.
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The army's ground offensive backed by warplanes is aimed at clearing the jihadists from their remaining strongholds in villages and smaller towns of Abyan and neighbouring Shabwa province.
- Government setbacks -
But the security forces have also experienced setbacks since the operation began.
On Tuesday, jihadists ambushed a military convoy, killing 15 soldiers and capturing 15, three of whom were later executed.
As the offensive gathered pace, with officials reporting at least 30 suspected militants and more than 24 soldiers killed this week, troops came under attack elsewhere in the south.
On Friday, gunmen shot dead an army officer in Aden, the capital of southern Yemen, which has seen a spike in attacks on security forces.
Witnesses said Saturday the government campaign forced hundreds of people to flee combat zones in Abyan and Shabwa provinces.
State news agency Saba cited a military official as urging residents to stay at home until further notice.
Also on Saturday, a suicide bomber targeted a military intelligence post in Mukalla, the capital of Hadramawt province in southeast Yemen, wounding two guards.
A security official said the guards fired on the car driven by an "Al-Qaeda suicide bomber" as it approached the gate but he still managed to blow himself up.
AQAP's Rimi vowed in a video posted online Friday that his group would attack "any establishment, ministry, camp or barracks" involved in the drone campaign.
The United States alone operates drones in Yemen, and Rimi said the jihadists will go after anyone "acting as an intermediary with the Americans."
He also denounced as a "lie" government claims that 70 percent of AQAP's fighters were foreigners, insisting that the majority are Yemeni.
The jihadists took advantage of a 2011 uprising that forced veteran strongman Ali Abdullah Saleh from power to seize large swathes of southern and eastern Yemen.