Authorities were investigating whether the detained man is Mustafa Setmarian Nasar, believed to be a leading figure in Osama bin Laden's terror network in Europe, said a government official who declined to be identified because he was not authorized to comment publicly on the case.
Nasar, also known as Abu Musab al-Suri, allegedly had a key role in the March 11, 2004, Madrid mass-transit bombings that killed 191 people and wounded more than 1,500, and his name has been linked to the July 7 terror bombings in London. Last year, Washington announced the reward for information leading to his arrest.
The slain suspect was a Saudi named Shaikh Ali Mohammed al-Salim who had been living with Nasar, said an intelligence official who also requested anonymity because he was not authorized to comment.
A third suspect, from the Pakistani militant group Jaish-e-Mohammed, allegedly linked to al Qaeda, also was captured in the raid this week in Quetta, the capital of Pakistan's southwestern Baluchistan province, said the intelligence official, who is based in Quetta.
Pakistan's information minister did not identify the suspects. "I can only confirm that there was an encounter, and our security forces arrested one suspected al Qaeda terrorist while another terrorist was killed," Sheikh Rashid Ahmed told The Associated Press.
The U.S. Embassy said it could not immediately confirm the arrests.
Nasar, 47, was born in Syria and also has Spanish nationality. The U.S. Justice Department's Rewards for Justice Web site describes him as an al Qaeda member and former trainer at terrorist camps in Afghanistan who instructed extremists in using poisons and chemicals. It also says he is likely to be in Afghanistan or Pakistan.
London's Metropolitan Police and Home Office were unable to offer immediate comment on British interest in Nasar in connection with the July 7 attack, which killed 56 people including four bombers.
In September 2003, Nasar was among 35 people named in an indictment handed down by a Spanish magistrate for terrorist activities connected to al Qaeda. He was alleged to have close ties with the suspected leader of the terror group's cell in Spain, a Syrian-born Spaniard named Imad Yarkas.
Pakistan, a key U.S. ally in its war on terrorism, says it has arrested more than 700 al Qaeda suspects since the Sept. 11, 2001, attacks in New York and Washington and has handed most of the suspects to the United States.
The last reported arrest of a suspected key al Qaeda figure in Pakistan was in May, when Abu Farraj al-Libbi, alleged mastermind of assassination attempts against Pakistani President Gen. Pervez Musharraf, was seized after a shootout in a northwestern town. He was handed over to the United States.