Jeffery Woodke, 55, was kidnapped from his home in Niger by gunmen suspected to be linked to jihadist group The Movement for Unity and Jihad in West Africa (MUJAO).
American Mr Woodke was taken from his home in the town of Abalak by a group of armed men in a Toyota Hilux pickup truck.
It is believed the Christian could have been driven across the border to Mali.
Mohamed Bazoum, Niger interior minister, said: “These criminals are now heading towards Mali. Our forces are on their trail.
“We think this is the MUJAO. We followed the kidnappers when they crossed the Malian border. They headed to the Menaka region (eastern Mali ), near the Niger border, an area controlled by the MUJAO.”
The MUJAO are a splinter group of al-Qaeda with its leaders known to be drug traffickers in the Sahel and southern Algeria.
It’s thought Mr Woodke could be used as a bargaining chip following a dispute over a stolen drug shipment which is said to involve a local government official.
One government source told CNN that witnesses in Abalak reported seeing the gunmen forcing Mr Woodke to strip to his underwear before bundling him into their getaway vehicle.
Residents reported hearing gunfire near the aid worker”s house late on Friday. The town mayor, Ahmed Dilo, said gunmen first came on a motorbike to kill the guard before the truck came to take Mr Woodke away.
The interior minister said one national guard stationed at the house was also killed.
A US embassy spokeswoman said there was an investigation into the incident but could not confirm any additional details.
A State Department official said: “We are aware of reports of the kidnapping of a US citizen in Niger.
“The US Department of State has no higher priority than the safety and security of US citizens overseas.”
The missionary, from McKinlyville, California, has lived in Niger since 1992 and is a longtime aid worker for The Youth With A Mission charity.
Mr Woodke is listed as an instructor on the website of The Redwood Coast School of Missions, a Christian mission based in the town of Arcata, about 270 miles north of San Francisco in California.
A description of Mr Woodke on the Redwood Coast website said: “Jeff has spent over a quarter of a century involved in missions ministry.
“He has committed the past 25 years of his life to a ministry he founded in Niger amongst a number of unreached people groups.”
Kidnappings of foreigners in Niger are rarer than in neighbouring Mali, where Islamist militants are active and often seize hostages for ransom or political capital.
The militants and allied criminal gangs have long exploited the largely unpoliced Sahara and attacks have increased this year as security worsens in Mali.
No US citizen has been kidnapped in Niger before, although in 2009 suspected Islamists attempted to abduct US embassy personnel from a hotel in the town of Tahoua.