In a statement, Sebby Sambom, spokesman for the West Papua Liberation Army or TPNPB, claimed the group's fighters in Yahukimo regency shot dead pilot Nicholas F Goselin and set fire to an aircraft operated by PT AMA, an Indonesian airline, in Balinggama village.
There was no immediate comment from the Indonesian military or the US embassy.
The transportation ministry's directorate-general of civil aviation said the plane was carrying one pilot and seven passengers.
After the pilot reported that the aircraft had landed, communications with personnel at the airstrip were subsequently lost, the ministry said in a statement.
Papua police's Cartenz Peace Task Force unit said they were still working to verify the condition of the pilot and the seven passengers and expected to deploy a team there on Friday.
Sambom said the aircraft was targeted because it allegedly violated a TPNPB ultimatum banning civilian flights from entering areas the separatist group considers its operational zones.
The spokesman alleged that civilian aircraft have been used to transport Indonesian military personnel and logistics into Papua's remote interior and said the pilot was killed because the aircraft continued operating despite the group's warning.
The claims could not be independently verified.
Sambom called on Indonesian President Prabowo Subianto to open international negotiations aimed at resolving the decades-long conflict in Papua, which separatists say has resulted in civilian deaths and mass displacement.
"The shooting of the American pilot is the result of the failure of the Indonesian, US and Dutch governments, as well as the United Nations, to address the root causes of the conflict in Papua, which has persisted for 64 years," the group's spokesman said in the statement.
He also urged the United Nations to facilitate talks involving the Indonesian government, the TPNPB and Papuan representatives, and warned that the group would target other civilian aircraft it believed were assisting military operations in the region.
Conflicts between Indigenous Papuans and Indonesian security forces are common in the impoverished Papua region, a former Dutch colony in the western part of New Guinea that is ethnically and culturally distinct from much of Indonesia.
Papua was incorporated into Indonesia in 1969 under a United Nations-sponsored ballot that was widely seen as a sham.
Since then, a low-level insurgency has simmered.
The conflict spiked in the past year, with dozens of rebels, security forces and civilians killed.
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