The six-minute clip, which appeared timed to coincide with celebrations for the Kurdish New Year, showed the peshmerga wearing orange jumpsuits being decapitated by three black-clad militants, all of whom spoke Kurdish.
The footage could not be independently verified.
The peshmerga have emerged as a key partner for the U.S.-led coalition in its campaign to “degrade and destroy” the extremist group, which they have driven back in northern Iraq with the help of airstrikes.
“To the Muslim Kurdish people: know that our war is not with you, rather it is with those who ventured into an alliance with the Safavids and crusaders to wage war on the Muslims,” said one of the militants, using derogatory terms to refer to Iran and the coalition respectively. Tehran has also provided assistance to the peshmerga.
Another of the militants then directly addressed Kurdish leader Masoud Barzani: “We warned you before that for every rocket you fire on those under the care of the Islamic State, you will kill one of your prisoners with your own hands.”
Kurdish forces shelled inside Mosul several days ago in what the peshmerga ministry said was retaliation for an Islamic State missile that landed in a vegetable market outside the regional capital of Erbil on Monday.
Earlier this year, a peshmerga was beheaded by a Kurdish militant in Mosul after Grad rockets were fired into the city by the Kurds.
Last month, another video was published showing captive peshmerga in cages being interviewed by a Kurdish militant.
Islamic State has previously beheaded Western aid workers and journalists as well as domestic opponents in Syria and Iraq.
More than 1,000 peshmerga have been killed in combat with Islamic State militants since they overran a third of Iraq last summer, but several hundred Kurds have joined the other side and are fighting against their ethnic kin.
Kurdish authorities last week said they had evidence the militants had used chlorine as a chemical weapon against the peshmerga on at least one occasion.