Japan says it is seeking to verify a video that claims Japanesehostage Haruna Yukawa, held by Islamic State (IS) militants, has been killed.
Prime Minister Shinzo Abe denounced the video as "absurd and unforgivable" following an emergency cabinet meeting.
Mr Abe said Japan "will not give in to terrorism".
On Tuesday the group threatened to kill Mr Yukawa and fellow Japanese hostage Kenji Goto unless Japan paid $200m (£130m) within 72 hours.
The video purports to show Mr Goto holding a picture of what appears to be the body of Mr Yukawa, and issuing a new demand from IS in return for his own release.
US National Security Council official Patrick Ventrell said the US was also trying to establish the authenticity of the video and was closely co-ordinating with Japan.