Ali, said Nesar Sabah Robaa Saleh, also known as Abu Rabiaa, was killed during a military operation in the city of al-Arish, Ahram Online reported Monday.
About 40 other suspected militants were arrested in the Sunday operation, Ali said.
Egyptian troops said they damaged 22 huts used as bases for attacks and seized documents connected to terrorist operations.
Saleh, who the army said was "one of the most dangerous" militants in North Sinai, was wanted in a number of attacks on security forces and military bases in the region.
Many soldiers and police officers have been killed in near-daily attacks in Sinai by Islamic militants since the ouster of Muslim Brotherhood-backed president Mohamed Morsi in July, the report said.