The videotape was found by Pakistani police investigating the disappearance of the reporter, who was kidnapped by Islamic extremists while chasing a story.
In a statement, Peter Kann, publisher of the Wall Street Journal, and Paul Steiger, managing editor said: "We are heartbroken at his death. Danny was an outstanding colleague, a great reporter, and a dear friend of many at the Journal."
The statement added: "His murder is an act of barbarism that makes a mockery of everything Danny's kidnappers claimed to believe in. They claimed to be Pakistani nationalists, but their actions must surely bring shame to all true Pakistani patriots."
The 38-year old Pearl disappeared in Karachi on January 23 while working on a story about the British shoe bomber Richard Reid and his possible links to Osama bin Laden's Al-Qaeda terror network.
A British man with links to Bin Laden has already been arrested in connection with the kidnapping. Ahmed Omar Saeed Sheikh, who was born in London and educated at an English public school, is believed to be behind recent emails. According to reports, he is a member of an Islamic terror group, which also has links to Al-Qaeda.
The arrest of Sheikh followed earlier arrests by Pakistani police of six people, three of whom are related to Sheikh. The six are all connected to a banned Islamic militant group Jaish-e-Mohammad, which translates as Army of Mohammad.
The group has also been linked to a number of cross-border attacks in India. It has been proscribed by the United States and is one of two groups being blamed by India for the attack on its parliament in December.
Sheikh, the son of wealthy Pakistani parents, was released by India in 1999 as part of a deal to end a hijacking, having been jailed in 1994 for his part in trying to take British and American hostages.
It was originally thought Pearl had been taken by a group not previously heard of, calling itself the National Movement for the Restoration of Pakistani Sovereignty. It had demanded the release of Pakistani prisoners captured by the US military in Afghanistan, and leading Islamic militants being held by the US.
Two weeks ago emails claiming that Pearl was dead were thought to be fake. The emails led to a search for Pearl's body near Karachi, but nothing was found.
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