Jamal Khashoggi was killed in a fight in the Saudi consulate in Istanbul, Saudi Arabia’s state TV reported quoting an initial probe.
According to the report, deputy intelligence chief Ahmad al-Assiri and Saud al-Qahtani, a senior aide to Crown Prince Mohammed Bin Salman, were dismissed over the affair.
President Donald Trump said what had happened was “unacceptable” but that Saudi Arabia was a “great ally”.
This is the first time Saudi Arabia has admitted Jamal Khashoggi has died.
The acknowledgement follows two weeks of denials that the Saudi kingdom had any involvement in the disappearance of the prominent Saudi critic when he entered the consulate in Istanbul on October 2 to seek paperwork for his upcoming marriage.
Saudi Arabia had come under increased pressure to explain Jamal Khashoggi’s disappearance after Turkish officials said he was deliberately killed inside the consulate, and his body dismembered.
On October 19, Turkish police widened their search from the consulate grounds to a nearby forest where unnamed officials believe his body may have been disposed of.
Observers are questioning whether Saudi Arabia’s Western allies will find the Saudis’ account of a “botched rendition” convincing – and whether it will persuade them not to take punitive action against Saudi Arabia.
A statement from the kingdom’s public prosecutor said a fight broke out between Jamal Khashoggi, who had fallen out of favor with the Saudi government, and people who met him in the consulate – ending with his death.
The investigations are still under way, the statement said, and 18 Saudi nationals have been arrested. The Saudi authorities have yet to give evidence to support this version of events.
State media said King Salman had ordered the sacking of two senior officials.
Saud al-Qahtani is a prominent member of the Saudi Royal Court and adviser to Crown Prince Mohammed bin Salman.
Major-General Ahmed al-Assiri has acted as the top spokesman for Saudi Arabia about the war in Yemen.
King Salman has also reportedly ordered the formation of a ministerial committee, headed by Crown Prince Mohammed, to restructure the intelligence services.
Saudi Arabia said it had acted on information provided by Turkish authorities as part of its inquiry, investigating a number of suspects.
President Trump praised Saudi Arabia for acting quickly, and while he said sanctions were an option against the kingdom, he spoke of the possible effect such moves would have on the US economy. He said the arrests were an important “first step”.
Asked if he found Saudi Arabia’s version of events credible, the president replied: “I do.”
President Trump stressed the importance of Saudi Arabia as a counterbalance to Iran in the Middle East, and pushed back against the need for sanctions against the kingdom in light of the new information, talking about the effect of such a move on the US economy.
Donald Trump spoke of his visit to Saudi Arabia – his first trip abroad as president – and the $110 billion arms deal he signed with the kingdom.
He said: “I’d rather keep the million jobs [in the US] and find another solution.”
Earlier this week President Trump said there would be “very severe” consequences if Saudi Arabia was proved to have killed Jamal Khashoggi.
The White House said in a separate statement the US was “deeply saddened” to hear confirmation of Jamal Khashoggi’s death.
Turkish officials believe Jamal Khashoggi was killed by a team of Saudi agents inside the consulate, and his body then removed – and they say they have video and audio evidence to back this up.
Saudi Arabia has denied this, and initially insisted Jamal Khashoggi had freely left the embassy.
Turkish newspapers with close links to the government have published gruesome details of the alleged audio, including what they describe as the sounds of screams and Jamal Khashoggi being interrogated and tortured.
Turkish media say they have identified a 15-member team of suspected Saudi agents who flew into and out of Istanbul on the day of the disappearance.