Omar al-Farouq, who has reportedly been killed by British forces in the southern Iraqi city of Basra, had been on the run since escaping from US custody in July 2005.
Farouq taunted his pursuers on a website video
His disappearance, along with three other suspected militants, from a high-security detention centre in Bagram, Afghanistan, was hugely embarrassing for the US, which hushed up the escape for several months.
Farouq had been passed to the US authorities after being arrested in Indonesia in 2002.
An Iraqi citizen brought up in Kuwait, Farouq is believed to have joined al-Qaeda in the early 1990s and trained in Afghanistan.
He became one of Osama Bin Laden's top lieutenants in south-east Asia and is believed to have been planning bomb attacks on US embassies there when he was arrested.
Farouq is thought to have been a key link between al-Qaeda and the militant group Jemaah Islamiyah, blamed for bombings in Indonesia, including the Bali attacks of 12 October 2002, in which more than 200 people were killed.
While on the run, Farouq taunted his pursuers by appearing in a video on an Islamist website in February this year.
"I say to the Americans... we will fight them... in Iraq and in their country," he said.
"They will not be able to stop the march of jihad... with their checkpoints, forces, machinery, advanced
equipment. No matter how strong or equipped they are, they will not defeat the Almighty."
But an intelligence tip-off led UK forces to Farouq's hideout in Basra's al-Tuninnah neighbourhood.
On 25 September 2006, more than 200 UK troops launched a pre-dawn operation to arrest him.
Farouq was armed and a gun-battle ensued, ending in the 35-year-old militant's death.
The BBC's security correspondent Frank Gardner says it will be a disappointment to the Americans that Farouq was not captured alive, because he had a wealth of knowledge on al-Qaeda's international operations.
Farouq is thought to have been previously staying in Zubair, a Sunni enclave near Basra, but may have only been in Iraq for a few weeks, our correspondent says.
This raises the obvious question of whether core al-Qaeda people are moving back into Iraq, he adds.