The video, entitled "A Second Message to America," appears very similar to the one in which Foley was beheaded. Sotloff is shown kneeling, dressed in an orange prison suit, and speaks to the camera.
"You know who I am by now, and you know why I am here," Sotloff, 31, said.
"Obama, your foreign policy of intervention in Iraq was supposed to be for preservation of American lives and interests," he continues, calmly, "so why is it that I am paying the price of your interference with my life?"
As in first video, a man dressed in black and wearing a mask speaks with a British accent.
"I'm back, Obama," he said, before drawing the knife across Sotloff's throat.
After the video fades to black, another hostage appears in the frame. Text on the video identifies that third hostage as British journalist David Haines.
"Just as your missiles continue to strike our people, our knife will continue to strike the necks of your people," the masked man said. "Obama, back off and just leave us alone."
White House Press Secretary Josh Earnest interrupted his daily press briefing as the news broke, and said the administration would work to confirm the authenticity of the video.
"Our thoughts and prayers are with Mr. Sotloff and Mr. Sotloff's family," he added.
Sotloff was kidnapped in 2013 while reporting in Syria. He had freelanced with Time magazine and Foreign Policy.
Sotloff's mother, Shirley Sotloff, put out a message last week pleading with IS to spare her son.
"My son Steven is in your hands," she said in a video message to IS leader Abu Bakr al-Baghdadi that aired on Al Arabiya news station. "As a mother, I ask your justice to be merciful and not punish my son for matters he has no control over," she pleads.
Examination of the first video indicated the masked militant was likely a British citizen, although his identity had not been confirmed by British investigators. Other video experts suggested evidence the British speaker and the actual executioner were two different people.
Below, a full transcript of Sotloff's remarks, per SITE:
I am Steven Joel Sotloff. I'm sure you know exactly who I am by now and why I am appearing before you. And now this time for my message:
Obama, your foreign policy of intervention in Iraq was supposed to be for the preservation of American lives and interests, so why is it that I am paying the price of your interference with my life. Am I not an American citizen? You've spent billions of U.S. tax payers dollars and we've lost thousands of our troops in our previous fighting against the Islamic State, so where is the people's interest in reigniting this war?
From what little I know about foreign policy, I remember a time you could not win an election without promising to bring our troops back home from Iraq and Afghanistan and to close down Guantanamo. Here you are now, Obama, nearing the end of your term, and having achieved none of the above, and deceivingly marching us the American people in the blazing fire.
And the statement of the masked man:
I'm back, Obama, and I'm back because of your arrogant foreign policy towards the Islamic State, because of your insistence on continuing your bombings and [unclear] on Mosul Dam, despite our serious warnings. You, Obama, have but to gain from your actions but another American citizen. So just as your missiles continue to strike our people, our knife will continue to strike the necks of your people...
We take this opportunity to warn those governments that enter this evil alliance of America against the Islamic State to back off and leave our people alone.
Editor's note: UPI will not reproduce, in part or in whole, the videos posted by IS. This is out of respect to the Foley and Sotloff families and because the videos constitute propaganda for a group designated as a terrorist organization by several countries, including the United States. The above description of the video's content is published solely on an informative basis.