Journalist Jamal Khashoggi was killed in a fight in the Saudi consulate in Istanbul, the country's state TV reports, quoting an initial inquiry.
Deputy intelligence chief Ahmad al-Assiri and Saud al-Qahtani, senior aide to Crown Prince Mohammed Bin Salman, were sacked over the affair, it says.
US President Donald Trump said what had happened was "unacceptable" but added that Saudi Arabia was a "great ally".
This is the first time the kingdom has admitted Mr Khashoggi is dead.
The acknowledgement follows two weeks of denials that Saudi Arabia had any involvement in the disappearance of the prominent Saudi critic when he entered the consulate in Istanbul on 2 October to seek paperwork for his forthcoming marriage.
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