 Gen Esperon showed journalists pictures of the dead militant
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Abu Sulaiman, also known as Jainal Antal Sali, was fatally wounded in a clash with soldiers on the southern island of Jolo, the army's chief said.
Sulaiman had a $5m bounty placed on his head by the US, in part for the 2001 abduction of a group of tourists on the island of Palawan.
The kidnapping resulted in the deaths of two Americans and several others.
Sulaiman is also believed to have been involved in the bombing of a passenger ferry in the central Philippines in 2004, which killed at least 100 people.
Military offensive
Philippines military chief Gen Hermogenes Esperon said Sulaiman had been killed on Tuesday during a fierce gun battle between troops and up to 60 Abu Sayyaf fighters.
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"We have resolved that this group and their major commanders must be finished off, that this notorious group should see its end," he said, according to the AP news agency.
Gen Esperon then put a cross through Sulaiman's photo on a wanted poster.
Abu Sayyaf is thought to have links with both al-Qaeda and the regional militant group Jemaah Islamiah, and has been blamed for a number of kidnappings and bombings in the region.
Late last month, the military said the head of the group, Khaddafy Janjalani, might have been killed in September, but this has yet to be confirmed.
Like Sulaiman, Khaddafy Janjalani - the younger brother of Abu Sayyaf founder Abdurajak Abubakar Janjalani - is also on a US wanted list.
Philippine troops backed by the US began an offensive on Jolo in August last year, in an attempt to capture Mr Janjalani and Indonesian terrorism suspects Dulmatin and Umar Patek, who are thought to be in the region.