The ISIS militants had warned the US that they will execute Sotloff in the same manner, as they brutally beheaded 40-year-old James Foley on August 19.
31-year-old Sotloff's killing was carried out in the same way as that of Foley, with a masked ISIS extremist pointing a knife at his neck.
In the video, Sotloff is seen kneeling in a desert and is clad in an orange prison-style jumpsuit, says, "Obama, your foreign policy of intervention in Iraq was supposed to be for the preservation of American lives and interests. So why is it that I am having to pay the price of your interference with my life? Am I not an American citizen?"
Then, the ISIS executioner, with British-accent says, "I'm back, Obama, and I'm back because of your arrogant foreign policy towards the Islamic State, because of your insistence on continuing your bombings and ... on Mosul Dam, despite our serious warnings. So just as your missiles continue to strike our people, our knife will continue to strike the necks of your people."
He also threatens by giving warning of another execution of another hostage, David Cawthorne Haines, a former British soldier.
Sotloff, a native of Florida, was a freelance journalist and was last publicly seen in August 2013 after which he went missing in northern Syria.
Just like Foley, his brutal beheading video drew condemnations from the world across, but ISIS keeps expanding its terror, without any fear.
ISIS has reportedly kept hostage two more Americans and three Britons, most of them are said to be aid workers.
As the beheading of a second American journalist by the Islamic State (IS) terror group sent shock waves through the nation, US President Barack Obama authorised 350 additional troops be deployed to Iraq.
Sotloff brings the number of journalists killed in Syria to at least 70, according to the Committee to Protect Journalists.
Family of slain US journalist Steven Sotloff 'grieving privately'
Meanwhile, in a two-sentence statement today, family spokesman Barak Barfi said Sotloff's family, quote, "knows of this horrific tragedy and is grieving privately."
The family has not been told whether the video is authentic, and Barfi said the family does not plan to make any additional comments now.