The terrorist group has released a video which purportedly shows the execution of Mr. Goto who was abducted by the group last year.
The 1 minute and 7 second clip shows Mr. Goto is being beheaded by the ISIL executioner known as Jihadi John who was involved in the beheading other foreign hostages.
“Because of your reckless decision to take part in an unwinnable war, this knife will not only slaughter Kenji, but will also carry on and cause carnage wherever your people are found. So let the nightmare for Japan begin,” the executioner addresses to Japanese Prime Minister Shinzo Abe before killing the hostage.
Goto was arrested by ISIL militants after he travelled to Syria last year in a bid to rescue his friend Haruna Yukawa who was also executed by the group last week.
He was a freelance journalist and was covering war zones including Afghanistan, Africa and the Middle East for more than 20 years.
The group had earlier demanded $200m for the freedom of the two Japanese hostages and set a deadline of sunset on Thursday for the freedom of Goto in return for the freedom of Iraqi woman Sajida al-Rishawi by the Jordanian government.