Mullah Muhammad Hassan Rahmani, who was in his mid-fifties and a member of the group's Leadership Council, died of cancer Monday night in a hospital in the southwestern Pakistani city of Quetta, two senior Taliban sources told AFP on Tuesday.
Rahmani rose to prominence as an extremist during the Soviet occupation of Afghanistan in the 1980s and lost a leg during the conflict, according to a statement on the Taliban's website which confirmed his death but did not say where it happened.
He was later appointed governor of Kandahar province, the Taliban's heartland, when the militants ruled the country from 1996 to 2001.
Quetta, the capital of Pakistan's restive Balochistan province, has long been rumored to host the "Quetta Shura" or Quetta Leadership Council of the Taliban – senior leaders who fled across the border to Pakistan after the US-led invasion of Afghanistan in 2001.
Pakistan, which was one of just three countries to recognize the Taliban during their period in power, denies the council's existence.
A senior Taliban leader told AFP: "He died in Quetta late Monday night and today his body was moved to Afghanistan. The burial will probably take place in Kandahar."
The source added: "He was a prominent figure in the Taliban leadership and there were some rumors he might soon announce his own splinter group."
The dominant faction of the Taliban is led by Mullah Akhtar Mansour, who officially succeeded founder Mullah Omar.
A major breakaway faction meanwhile is led by Muhammad Rasul, whose faction is seen by some analysts as closer to Iran.
Rahmani's death in Pakistan, which was confirmed by another senior militant source, comes as the Taliban step up their attacks in an unprecedented winter surge a year after the withdrawal of NATO combat troops.
Nine people were killed and eighteen injured in separate suicide attacks Monday, days after a fresh round of international talks in Islamabad aimed at reviving dialogue with the Islamist group.
With neither side in the conflict seemingly able to accomplish a decisive victory, Kabul, regional powers and the United States have pinned their hopes on a peace settlement.
On Saturday representatives from Afghanistan, Pakistan, China and the US announced that direct talks between Kabul and the Taliban were expected to take place by the end of the month.
An earlier round of direct dialogue last July fell apart.
Security analyst Talat Masood, a retired Pakistani general, said the Afghan Taliban's presence in Pakistan was "an open secret and it seems to be getting confirmed and reconfirmed."
He added that due to pressure from the country's powerful military, such news was routinely suppressed in the Pakistani media.