Tribal sources inside Yemen confirmed to al-Arabiya that U.S.-born Awlaki was killed in an airstrike Friday between two provinces in the country known to be sympathetic to al-Qaida.
Awlaki was the key spokesman and ideologue for al-Qaida in the Arabian Peninsula, the Yemeni franchise of al-Qaida.
Awlaki is accused of being the ideological mind behind the Fort Hood, Texas, shooting rampage in 2009 and several other terrorist plots, including a series of schemes targeting international airfreight carriers last year.
The Yemeni cleric was placed on Washington's hit list after the Fort Hood shooting and attempts to down a passenger plane over Detroit on Christmas Day, 2009.
Despite the kill-or-capture order, Stratfor, a private intelligence company in Texas, said his reported slaying shouldn't be overstated.
"AQAP's ideological and physical battle against the West will continue whether he is dead or not," its analysis stated.
Stratfor emphasizes that Awlaki isn't in charge of AQAP, though its leader, Nasir al-Wahayshi, has placed considerable emphasis on communicating a message of jihad.
"But AQAP does not just operate on the ideological battlefield," the analysis stressed.
British Foreign Minister William Hague, in a statement posted through his Twitter account, said the reported death was a blow to AQAP but added that pressure on al-Qaida and its allies must continue.
Awlaki was previously reported dead in December 2009 and again in May.