On Tuesday the group threatened to kill Mr Yukawa and fellow Japanese hostage Kenji Goto unless Japan paid $200m (£130m) within 72 hours.
Japanese Prime Minister Shinzo Abe condemned the latest video as "absurd and unforgivable".
The video purports to show Mr Goto holding a picture of what appears to be the body of Mr Yukawa, and issuing a new demand from IS in return for his own release.
'Abominable and unforgivable'
Japan's chief cabinet secretary Yoshihide Suga denounced the latest video at the meeting.
"A photograph of Kenji Goto holding a photograph showing a killed Japanese person, suspected to be Haruna Yukawa, has been released on the internet.
"This is an abominable and unforgivable act of violence. We strongly condemn this action," he said.
"We strongly request that no harm be done to the remaining person, Kenji Goto, and that he be released immediately."
Kenji Goto is a well-known freelance journalist and documentary film-maker. Mr Yukawa had reportedly gone to Syria to set up a private military contracting company.
In a video released on Tuesday, a masked man was shown standing over kneeling hostages named as Mr Yukawa and Mr Goto and demanding the ransom.
The ransom is the same amount as that pledged in non-military aid for countries fighting IS by Prime Minister Abe during a recent tour of the Middle East. bye.
