31 January 2015
Last updated at 15:33 ET
IS had demanded a $200m (£130m) ransom for the two men.
Mr Goto, 47, is a well-known freelance journalist and film-maker who went to Syria in October, reportedly to try to secure Mr Yukawa's release.
by Nasra Ismail and Biodun Iginla, BBC News Beirut
A video has been released online purporting to show the beheading of Japanese hostage Kenji Goto by Islamic State militants.
The video comes less than a week after news of the beheading of another Japanese man, Haruna Yukawa. IS had demanded a $200m (£130m) ransom for the two men.
Mr Goto, 47, is a well-known freelance journalist and film-maker who went to Syria in October, reportedly to try to secure Mr Yukawa's release.
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