Khattab was high on Russia's most wanted list
Khattab has been high on Moscow's wanted list in Chechnya since the start of the current Chechen war in 1999. The US also believes Khattab may have links to Osama Bin Laden's al-Qaeda network.
However, Mairbek Vachagayev, spokesmen for the Chechen rebel leader, Aslan Maskhadov, said Khattab was still alive and dismissed the Russian announcement as a propaganda trick.
"I think the Federal Security Service is at a loss as to where he may be and is trying to trick him out into the open," Mr Vachagayev told Ekho Moskvy radio.
Elusive rebels
This is not the first time that Moscow has claimed to have eliminated him, but the FSB's spokesman, Alexander Zdanovich, said that documentary evidence for Khattab's death would be produced soon.
If Khattab has been killed, it will be one of the most significant breakthroughs yet for the Russians.
The Russian President, Vladimir Putin, claimed last week in his state of the nation address that the military operation in Chechnya was effectively over.
But, nearly three years after Russian troops were sent back into the rebel republic where they had suffered an embarrassing defeat in 1996, soldiers are still dying.
On the ground, Russian commanders know that, despite heavy losses, the Chechen rebels are still strong.
One of the main reasons for this is that very few of their leaders have been eliminated or captured.
The Americans too, will be very interested to see Moscow's evidence of Khattab's death, as they believe he may have had direct links with al-Qaeda.
Taking out such an important figure would help Moscow to justify its operation in Chechnya as being part of the international fight against terrorism.