Two of the hostages are Dutch and the third a South African who may have lived in the UK, say reports. The nationalities have not been confirmed.
The dead man, a German, was shot dead after refusing to climb into the gang's truck.
His death by the suspected local chapter of al-Qaeda come less than 24 hours after two French geologists were seized by gunman in the eastern village of Hombori.
UK citizens have already been warned not to travel to northern Mali because of the threat and today city authorities have ordered a plane to evacuate all foreigners from Timbuktu.
They will be taken to the capital of Bamako, according to the owner of the hotel where the three abducted men and their dead friend were staying as they toured the country.