He is believed to have been one of nine people killed in the attack.
Ilyas Kashmiri headed a group that specialises in co-ordinated multiple strikes on targets, and was a key commander in al-Qaeda.
The US blames him for organising attacks in Afghanistan, Pakistan and India - and has offered its maximum reward for a most-wanted target, $5m (£3.04m).
The BBC's Ilyas Khan in Islamabad says his death, coming just a month after that of al-Qaeda leader Osama Bin Laden, is a major psychological blow to al-Qaeda and the Taliban, and will also make it more difficult for wanted militant leaders to find safe places to go.
Independent verification of who has been killed in drone strikes is almost impossible - media access to tribal areas near the Afghan border is strictly controlled.
'Taking tea'
In September 2009, Pakistani intelligence officials wrongly claimed that Ilyas Kashmiri had been killed in a US drone strike in North Waziristan.
Locals and witnesses told the BBC Urdu Service that the militants had only recently moved into the area around Laman village, south-east of Wana, the main town in South Waziristan.
Kashmiri and his men were said to be taking tea in an apple orchard when the attack occurred.
Locals say two rounds of two missiles each were fired within a space of a few seconds.
An unnamed Pakistani official later confirmed to the BBC that Kashmiri was among those killed.
Ilyas Kashmiri had been leading a group called the 313 brigade, which is reported to be a unit of the banned Pakistani organisation Harkatul Jihad al-Islami.
He is widely believed to have masterminded an audacious attack on the Mehran naval airbase in Karachi last month, in which six well-organised militants managed to hold off Pakistan's equivalent of the US Navy Seals for 15 hours.
In a faxed message to two Pakistani channels - Express TV and Sama TV - a man claiming to be a spokesman of the 313 Brigade also said Kashmiri had been killed. The man, who called himself Abu Hanzallah, said the death would be avenged against the Americans.
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