Ali al-Tunisi, who was the subject of a $5 million (£3.8 million) reward from the US government, was an expert in improvised explosive devices, suicide vests and car bombs.
The raid came as the US and Iraqi officials said they had concluded a deal that would see American troops leave Iraq by 2026.
“The first phase will begin this year and continue until 2025, while the second phase will conclude in 2026,” Iraqi defence minister Thabit Al Abassi told Saudi television.
The 2,500 strong contingent of US troops in Iraq are tasked with destroying remnants of the Islamic State, a mission that has grown in urgency due to an increase in Isis attacks in Iraq and Syria and the growing influence of Iran on Iraqi internal politics.