Mehsud's aides have disputed the claim and say he is alive.
Holbrooke, who is visiting Pakistan this weekend to meet top leaders, said Mehsud operated as an 'independent subsidiary of Al Qaeda' and targeted Pakistanis.
Addressing the question of Taliban hideouts in the tribal areas was central to the overall security efforts in the Pakistan-Afghanistan border region, he said. Holbrooke also praised the anti-Taliban consensus among the people of Pakistan.
Taliban Pakistan, an alliance of around 13 militant groups, is blamed for a wave of bomb and suicide attacks across Pakistan, including the one that killed former prime minister Benazir Bhutto in December 2007.