Other Nusra Front sources said they could not confirm or deny the report "because contact with al-Golani was cut," the Observatory said in a statement. A rebel commander in a Damascus suburb contacted by The Associated Press said he believed al-Golani was "alive and well" based on his contacts with other fighters including those from Nusra Front. He declined to elaborate or be identified for security concerns.
The report comes as the fragmented rebels have suffered significant losses on the battlefield.
Syrian troops killed at least 40 opposition fighters, including Nusra Front members, earlier Friday in an ambush near Damascus, the government said.
Assad's forces backed by Lebanese Hezbollah gunmen also seized control of a rebel ammunition supply route on a highway linking the capital to its eastern suburbs part of a blistering government offensive to bolster its position amid an international push for peace talks.
State TV said al-Golani was killed in the coastal province of Latakia. It did not say when or give other details. News of his death was not mentioned in the main headlines of the TV's late night news bulletin.
Al-Golani, who fought previously in Iraq, is a shadowy figure who is believed to have spent time recently in rebellious suburbs south of Damascus. Rebels have also gained footholds in mountainous regions of Latakia, which is largely loyal to Assad, and he may have gone there to direct fighting.
The Nusra Front is on a U.S. State Department list of terrorist organizations. The group has claimed responsibility for numerous suicide bombings against government targets.
Al-Golani gained prominence in April when he rejected an attempted takeover of the group by Abu Bakr al-Baghdadi, the head of the Islamic State of Iraq, revealing a growing rift within al-Qaida's global network.
Al-Golani at the time distanced himself from claims that the two groups had merged into a group called the Islamic State of Iraq and the Levant. Instead, he pledged allegiance to al-Qaida's leader Ayman al-Zawahri.
He said that al-Baghdadi's announcement of the merger was premature and that his group will continue to use Jabhat al-Nusra as its name.
The group is more popular in Syria than the ISIL, which is largely made up of foreign fighters and has been criticized for its brutality and for trying to impose a strict version of Islamic law in areas under its control.
Al-Golani's death could strengthen ISIL at a time of growing infighting between al-Qaida extremists and the more moderate rebels from the mainstream Free Syrian Army.
Assad's forces have been gaining ground in rebel-held areas around the capital, the seat of his power, and have made progress against outgunned and fragmented fighters in several areas.
On Friday, the state-run news agency SANA said 40 rebels died in the ambush near Otaiba.