Nurul Islam, one of the top accused in the 2016 Dhaka cafe attack, was gunned down by the anti-terrorist squad of Dhaka police on Friday.
A top official said Nurul was second in command, after ISIS Bangladesh chief Tamim Chowdhury.
"He was hiding in the outskirts of Dhaka. Based on a secret tip, we raided the hideout and Nurul was killed in an encounter," said Anwar Hossain, a senior officer of Dhaka police.
Nurul took charge of new JMB (Jamaat-ul-Mujahideen Bangladesh), which is the nodal group of ISIS Bangladesh.
The Dhaka attack, in 2016, claimed around 21 lives, most of them foreign nationals. He was one of the prime suspects behind the expansion of terror groups in West Bengal.
The encounter took place at around 7 am on Friday morning.
The officer said that JMB was still active in Bangladesh.
"The raids will continue," said the officer.