A virus purporting to show video of Nick Berg alive has been released on the internet, warn security experts.
Nick Berg went to Iraq as an independent businessman
The virus is in a message post to tens of thousands of newsgroups, said anti-virus firm Sophos.
It is the same one that posed as a suicide note from Arnold Schwarzenegger and as images claiming to show that Osama Bin Laden had killed himself.
Computer owners are advised to ensure their anti-virus software is up-to-date and avoid opening unknown messages.
The message is the latest by a group called the Hackarmy designed to spread malicious code which can allow hackers to take control of a computer.
It claims that the Arab satellite television channel Al Jazeera has released footage of the beheaded American.
"Conspiracy theories of Nick Berg being alive and well in Iraq have today been proven true," reads the message.
It goes on to say that the video footage was found on an Islamic website in Malaysia.
The message is designed to entice recipients to open a file that unleashes the Trojan horse program.
Nick Berg was beheaded by Iraqi insurgents who said they were avenging the abuse of Iraqi prisoners at Abu Ghraib jail by US soldiers.
His death was shown on a gruesome video broadcast on an Arabic website.
"Duping innocent users into believing that Nick Berg is in fact alive shows hackers stooping to a new low," said Graham Cluley, senior technology consultant at Sophos.
"This gruesome insensitivity is a despicable ploy to get curious computer users to download malicious files."
An earlier version of the message named Osama Bin Laden
The group behind the virus have previously tried to trick computer users by sending out messages purporting to show of Osama Bin Laden's suicide, as well as a suicide note from Californian governor, Arnold Schwarzenegger.
"This time, in an attempt to infect yet more PCs, they've resorted to claims that someone who was brutally killed is in fact alive," said Mr Cluley.
Computer users are advised to ensure they have up-to-date anti-virus software and to be wary of opening attachments in e-mails that they were not expecting.