Masood (left) was the lynchpin of the anti-Taleban forces
Commander Masood was killed in a suicide bomb attack at his headquarters in a garrison town in the northern province of Takhar.
The BBC Afghanistan correspondent, Kate Clark, says it is difficult to over-estimate how serious a blow his death has dealt to the alliance.
Militarily, he was the lynchpin for anti-Taleban forces. He was also the opposition leader whose reputation had best survived 20 years of war.
Soviet war
A follower of radical Islamic politics as a young man, Ahmed Shah Masood went on to become one of the most successful Mujahadeen commanders in the fight against the Soviet invasion of the 1980s.
After the Mujahadeen captured the Afghan capital, Kabul, in 1992, Commander Masood was appointed defence minister.
There were many allegations at the time of corruption and cronyism in his ministry. The government was to fall apart anyway as the various factions fought a bitter internecine war for control of Kabul.
Commander Masood's Jamiat-i-Islami, like the others, rocketed civilian areas causing massive destruction. Tens of thousands of people died in the bombardments or fled the city.
After withdrawing from Kabul in 1996 in the face of the advancing Taleban, his forces have gradually been pushed back into the north-east of the country.
'Civil and postive'
The BBC's former Kabul correspondent, William Reeve, met Commander Masood on several occasions.
"He seemed to always have a very clear idea in his mind as to what he wanted," he said.
"It was just difficult for him in the messy civil war always to get his way."
William Reeve described Commander Masood as being very civil during their meetings.
"He always arrived looking spick and span with a jump in his step. He was very positive.
"He usually talked about the fighting and how he saw it was going to transpire."
Reinforced
This year, Commander Masood's alliance was strengthened by the return of several significant military leaders to Afghanistan.
They include the Uzbek commander, General Dostum and the former governor of Herat, Ismail Khan, who escaped from a Taleban jail last year.
So far, despite some intense fighting, neither side has gained much territory.
But the loss of Ahmed Shah Masood could push the balance, perhaps decisively, in the Taleban's favour.