The leader of the Shariat Jamaat Islamist group, Khalilov was believed to have been behind two bomb attacks in Daghestan, in Kaspiysk (2002) and in Buynaksk (1999). The bombings claimed the lives of over 100 policemen and military personnel.
Khalilov and another member of the group, Nabi Nabiyev, from Azerbaijan, were killed in a 12-hour operation carried out on Monday by Russian special forces in the town of Novy Sulak, in the Kizilyurt district of the republic.
The battle started at 6.30 a.m. local time (2.30 a.m. GMT), when the two gunmen, holed up in a local residence, began to offer "armed resistance," a Federal Security Service (FSB) spokesman said.
The house the Islamists were sheltering in was subsequently destroyed by armored military vehicles during the battle, and Khalilov's death was later confirmed by the FSB.
"While searching through the rubble, the bodies of two gunmen, one of them identified as Rappani Khalilov, were found," the spokesman said.
He added that two members of the Russian special forces had been slightly wounded in the operation.
The Federal Security Service also said that Khalilov had had close ties with international terrorist organizations.
Although the active phase of the North Caucasus anti-terrorism campaign officially ended in 2001, periodic bombings and clashes between gunmen and federal troops still disrupt Chechnya and nearby regions, including Daghestan, Ingushetia, Kabardino-Balkaria, and Karachayevo-Circassia.