Major General Khaled Kamal Othman was killed yesterday after militants opened fire at him during an inspection in Al-Arish city, the Ministry of Interior said.
Egypt's branch of the Islamic State group Sinai Province has claimed the responsibility of the attack on Twitter.
Egyptian police have cordoned off the area and are currently searching for the attackers, the statement said.
Egypt's North Sinai has witnessed many violent attacks by militants since the January, 2011 revolution that toppled former president Hosni Mubarak.
Over 600 security personnel have been reported killed so far.
The military has launched security campaigns in the area, arrested suspects and demolished houses that belong to terrorists, including those facilitating tunnels leading to the Gaza Strip.
Sinai Province is the most active militant group in Egypt. It has been linked to a number of deadly attacks not only in North Sinai but also in the capital Cairo, besides other provinces.
The Islamist group has been active on the Sinai Peninsula since 2011 and was initially known as Ansar Beit al-Maqdis.
