The Syrian Observatory for Human Rights (SOHR) said on Monday that Dall'Oglio may not have been killed, based on sources close to the Islamic State of Iraq and the Levant (ISIS) group, Reuters reported.
On Wednesday the Observatory announced that the priest had been killed while in custody of the ISIS, a group with links to al-Qaeda.
The Italian foreign ministry was unavailable for comment when contacted by The Local; earlier this month Minister Emma Bonino said she remained hopeful that Dall'Oglio would be found alive.
Fears over the priest's safety were first raised on July 29th, with opinion divided over whether he had been taken hostage by the ISIS or had willingly gone to meet the group to negotiate the release of hostages.
He was last reported to be in the rebel-held city of Raqqa.
Just days after Dall'Oglio disappeared, Pope Francis voiced his concern for the fate of the fellow Jesuit.
The priest is a fierce critic of the Syrian government's violent response to a popular uprising which begun in 2011 and has since descended into civil war, claiming more than 100,000 lives.
He was thrown out of the country by President Bashar al-Assad in June 2012, although is thought to have re-entered the country last month via the Turkish border.
Dall'Oglio has been praised internationally for leading the Deir Mar Musa monastery close to the capital Damascus and fostering dialogue between Christians and Muslims.
Read more about Father Paolo, our Italian of the week earlier this month.