The Syrian Democratic Forces (SDF) said it had caught Alexanda Amon Kotey in eastern Syria in January as he tried to flee to neighbouring Turkey.
Meanwhile a US defence official announced on Thursday that fellow Briton El Shafee el-Sheikh, another "Beatles" member, had also been captured by Syrian rebel forces.
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Kotey and Sheikh were part of a four-member Islamic State kidnapping cell dubbed "The Beatles" by their captives due to their heavy British accents. They were notorious for videotaping beheadings.
"We captured some big commanders. One of them is Alexanda Kotey," Redur Khalil, a spokesperson and senior official in the SDF, told AFP in the northeastern town of Amuda.
"He was captured by an anti-terrorism unit on January 24 in the countryside near Raqa. He was trying to escape to Turkey in coordination with his friends and contacts on the Turkish side," he said.
The cell was believed to be behind the killing of American journalist James Foley and numerous Western aid workers.
Diane Foley, his mother, said she wanted the two men to face trial in the US and life imprisonment.
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"Their crimes are beyond imagination," she told BBC radio.
"It doesn't bring James back, but hopefully it protects others from this kind of crime."
The pair's arrest follows a four-month operation spearheaded by Syrian Democratic Forces (SDF) that culminated in mid-October with the retaking of Raqa, which had been the inner sanctum of the "caliphate" declared by Islamic State in 2014.
That victory was the doom of the extremist proto-state, the last pockets of which were then retaken within weeks by the SDF and other forces in Iraq and Syria.
The duo "participated in the detention, exploitation and execution of Western detainees," the American security official said in a statement.
Aine Davis, a third so-called Beatles Islamic State member, is being held in Turkey, while the fourth, Mohammed Emwazi was killed in a 2015 coalition drone strike.
Redur Khalil could not confirm Sheikh's capture however, saying he had no information about the British militant.
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He said that Kotey was being questioned but did not specify who by.
Last year, the US State Department said London-born Kotey had "likely" taken part in executions and used "exceptionally cruel torture methods, including electric shock and waterboarding".
Britain's Defence Secretary Gavin Williamson told The Times newspaper on Friday: "These are people who have done absolutely vile and despicable crimes and brought absolutely so much misery.
"It is good that they have been hunted down and caught."
Bethany Haines, whose British aid worker father David was killed in 2014 after being held captive for 18 months, said she hoped the pair's detention could bring closure.
"The first thought was relief, finally to know that the people that were involved in my dad's murder have been caught and will sort of serve some justice," she told Britain's Independent Television ( ITV).
She said she wanted them to be "locked up with the key thrown away".
Tobias Ellwood, a British defence minister, said Friday the pair should face an international war crimes tribunal and not be sent to Guantanamo Bay as some have speculated will occur.
He said terror suspects once captured "must answer and be judged to a legitimate authority".
"Given the scale of foreign fighters we should consider an agreed international process involving The Hague," he told The Daily Telegraph newspaper.
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But the broadsheet reported London would not hinder any moves to extradite the pair to the US and there was little desire among ministers to repatriate them to Britain.
It quoted Williamson as saying: "I don't think they should ever set foot in this country again."
The Ministry of Defence declined to comment, amid reports their UK citizenship had been stripped under anti-terror laws.
French journalist Nicolas Henin, who was kidnapped and held by Islamic State for 10 months, demanded the men be brought to justice in the UK.
"This is the beginning of a process that will bring them eventually, hopefully, to a trial," he told Sky News.
"Guantanamo is a denial of justice. What I want is a trial and a trial potentially that I can attend, so rather, a trial in London rather than one in Kobani in northern Syria."
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