An Islamic militant website has shown a video apparently showing the beheading of an American in Iraq.
The victim said he was an American from Philadelphia
The video showed five men in headscarves and ski masks cutting off the man's head with a knife.
Moments earlier the victim, bound and dressed in an orange jumpsuit, said he was an American from Philadelphia.
The group, thought to be linked to al-Qaeda, said it was carrying out the killing in retaliation for the abuse of Iraqi prisoners by US soldiers.
The poor-quality tape - shown on the Muntada al-Ansar site - began with the victim sitting on the floor with five masked men behind him.
It was titled "Abu Musab al-Zarqawi shown slaughtering an American".
The CIA is said to be checking to see whether Zarqawi - a senior al-Qaeda operative accused of masterminding multiple bomb attacks against US forces in Iraq - was actually in the video.
Washington vowed to find the killers.
"It shows the true nature of the enemies of freedom," said White House spokesman Scott McClellan.
have no regard for the lives of innocent men, women and
children. We will pursue those who are responsible and
bring them to justice."
However, the victim's father said the US authorities were indirectly to blame for his death for failing to get him safely out of the country.
The victim identified himself as Nick Berg, a US civilian contractor. His body was found near a highway overpass in Baghdad on Saturday.
Details of Nick's death added to the pain of his grieving family
"My father's name is Michael, my mother's name is Suzanne," the man said on the video. "I
have a brother and sister, David and Sarah. I live in...
One of the masked men read out a statement, saying they had offered to exchange the man for inmates of Abu Ghraib prison but the coalition authorities refused.
"How can a free Muslim sleep well as he sees Islam
slaughtered and its dignity bleeding, and the pictures of
shame and the news of the devilish scorn of the people of
Islam - men and women - in the prison of Abu Ghraib?" he said.
"You will not receive anything from us but
coffins after coffins... slaughtered in this way."
The statement also threatened US President George W Bush, saying he would regret the day he stepped into Iraq.
It described Pakistani President Pervez Musharraf as a "traitor agent".
After reading the statement, they pulled the man to the side and put a knife to his neck.
The man screamed as he was killed.
His killers shouted "Allah is great" before holding what appeared to be a head up to the camera.
The 26-year-old Mr Berg, who owned a communications equipment company, was involved in rebuilding antennas in Iraq before he disappeared on 9 April.
But he went missing prior to that, and was later found to have been arrested at an Iraqi checkpoint in Mosul and held in an Iraqi jail with Iraqi prisoners for 13 days, his father told American TV on Tuesday morning, before the video was released.
Michael Berg said the US authorities were indirectly responsible for his death, by failing to secure his release and thereby causing him to miss his flight home on 30 March.
"He would have missed the escalation if they had let him go," he said.
The Berg family declined further comment after receiving news of the video.