A recently recovered photo shows the visibly distressed baby girl - believed to be around four months old - being pinned to the ground with a knife to her throat.
The photo of the girl is suspected to have been taken a week last Friday.
The child is believed to be from a family of Alevi Muslims, a branch of Islam whose followers have been targeted by Isis.
"Each time I look at this picture it makes me weep"
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There were no shots of her decapitation and her body has not been found, leading some to hope she had a miraculous escape.
The many fighters who have circulated the picture on Facebook have nicknamed her ‘Melek’, meaning angel.
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One source, Ali, who obtained the picture from YPG soldiers, told The Mail on Sunday: "The people of Kobani are desperate for the world to see with their own eyes the atrocities inflicted by these filth.
"Each time I look at this picture it makes me weep.
"You can see how frightened she is. I can almost hear her scream. What kind of depraved monsters are they? What pleasure can killing this child bring anyone?"
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Soldiers said Melek, a woman and an older child – thought to be her mother and sister – were witnessed being dragged out of hiding by IS around the time of an air strike.
"Some have a flicker of hope in their hearts that they might have escaped," added Ali.
Earlier, Isis militants released images of the public crucifixion of a teenage boy. The barbaric punishment took place over three days in the central square of the extremists' de facto capital Raqqa.
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The militant group accused the teenager of taking photographs of the terror group's headquarters in Syria.