The footage showed the victims being killed by two groups of IS militants, one called the "Fezzan Province" and the other, "Barka Province", according to a Xinhua report.
The video went viral on social media and was retweeted by several Libyan militant groups loyal to the IS.
So far, no Libyan officials have been able to verify the authenticity of the video.
Libya, a major oil producer in North Africa, has been witnessing a frayed political process after former leader Muammar Gaddafi was toppled during the 2011 political turmoil.
The country is now locked in a fight between the pro-secular army and Islamist militants that has caused a security vacuum in the country, conducive for homegrown extremism to rear its head.
Some IS affiliates have, in fact, taken the opportunity and seized the cities of Sirte and Derna.
In February, IS had released a video showing the beheading of 21 Egyptian Coptic Christians by a Libyan branch of the extremist group.