Former Taleban leader Mullah Mohammed Omar was seen in the Pakistani border town of Quetta last week, according to Afghan President Hamid Karzai.
Mullah Omar's precise whereabouts are still unknown
Mr Karzai told The Times newspaper he had received information that Mullah Omar was spotted praying in a mosque.
There have been no confirmed sightings of him since the Afghan war ended.
Mullah Omar is one of the three men most wanted by US-led coalition forces in Afghanistan and Iraq, along with Osama bin Laden and Saddam Hussein.
As the supreme leader of Afghanistan's deposed regime, he has periodically issued taped messages urging his followers to maintain their attacks on western forces.
The latest reported sighting of the cleric comes nearly two years after the last Taleban stronghold fell to US-backed forces in Afghanistan.
President Karzai told the London-based Times newspaper that Quetta was a stronghold for fighters opposing the coalition forces.
He called on Pakistan's President Musharraf to prevent hard-line Islamic groups in the city from supporting those responsible for the recent upsurge in violence in Afghanistan, which has left more than 400 people dead in the past four months.
But Pakistani Information Minister Sheikh Rashid Ahmed denied the report of the sighting and said it was "irresponsible".
"There's no truth in this report. We want good relations with Afghanistan. We supported them when they needed our help. We are still supporting them in the fight against terrorism, he told The Associated Press.