The Lebanese army issued a statement "confirming the death of detainee Majed Al-Majed this morning at the central military hospital after deterioration in his health."
A Saudi national, Al-Majed is accused of heading the Abdullah Azzam Brigades, a Sunni jihadist group that has claimed responsibility for several bombings.
News of his death, which comes only a day after the Lebanese army announced his arrest, has prompted questions in Lebanon over exactly what happened. No details of his health issues have yet been released.
Al-Majed was captured a few days ago by Lebanese army intelligence agents, Lebanon's state-run National news Agency said.
The army said Friday that Al-Majed, whose identity was confirmed by DNA testing, had been on Saudi Arabia's most wanted list since 2009.
The Abdullah Azzam Brigades recently took responsibility for a pair of suicide bombings targeting the Iranian Embassy in Beirut that left more than 20 people dead.
The group warned that more attacks would come unless Hezbollah, a Lebanese-based, Iranian-backed Shiite militia, stopped sending fighters to support Syrian regime forces.
The Abdullah Azzam Brigades has previously claimed responsibility for a failed attack on U.S. warships docked in Jordan and for bombings of Egyptian beach resorts in 2004 and 2005 that killed more than 100 people.
The United States declared it a terrorist group in 2012, saying it was responsible for a 2010 attack on a Japanese-owned oil tanker in the Strait of Hormuz and had expressed interest in attacking Western interests in the Middle East.
The group formed in the Palestinian refugee camps in Lebanon and has battled Lebanese government troops before.
CNN's Nada Husseini contributed to this report.