A Saudi soldier died in a gun battle with militants in the western Taif region outside Mecca on Sunday, state news agency SPA said.
Two assailants opened fire on a police station before retreating to the mountain village of Thaqeef where the soldier, named as private Saeed al-Harithy, was killed in an exchange of fire, SPA reported.
Troops found an explosive vest and bomb-making material and the security operation was ongoing, the news agency added.
Saudi forces have been caught up in an escalating confrontation with Islamic State militants in the last week after troops shot dead two Islamic State fighters and two others blew themselves up in a raid on their compound outside the holy city of Mecca on Thursday.
Two other Islamic State suspects were killed and a third was wounded in southwestern Bisha province last Sunday.
Saudi Arabia, the world's top oil exporter, has been hit by a spate of deadly gun and bomb attacks on security forces and its Shi'ite Muslim minority since last year. Islamic State's local branches have claimed many of them.
The group views Shi'ites as heretics and opposes the wealthy Gulf kingdom's Sunni Muslim rulers, whom it regards as having betrayed Islam through close ties with the West.