The Site monitoring group said on Tuesday that the armed group released the video of his death. Other internet monitors said they had seen the video and confirmed its content.
In the new video the group also threatened to kill another captive David Cawthorne Haines, a Briton.
The release comes two weeks after the group killed James Foley, another US journalist, claiming his death was revenge for US attacks on its fighters in Iraq.
The group released a video showing the killing of Foley. In that video, Sotloff was pictured, with a fighter saying his life depended on US president Barack Obama’s next move.
Sotloff had been held hostage in Syria by the armed group since August 2013.
His mother, Shirley Sotloff, directly addressed the group’s leader Abu Bakr al-Baghdadi in an emotional appeal for his release less than a week ago.
“You, the caliph, can grant amnesty. I ask you, please, release my child. I ask you to use your authority to spare his life,” Mrs Sotloff said in the video.
The US government said it could not confirm that Sotloff was dead.