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The United States said was "saddened" to hear the confirmation of Khashoggi's death, but made no mention of action against its major ally.
Saudi Arabia on Saturday admitted that journalist Jamal Khashoggi was killed inside its consulate in Istanbul after "discussions" at the consulate devolved into an altercation.
The kingdom also sacked deputy intelligence chief Ahmad al-Assiri and royal court media advisor Saud al-Qahtani, both top aides to Crown Prince Mohammed bin Salman who has faced mounting pressure over the Khashoggi affair.
As many as 18 people have been taken into custody, according to Saudi officials.
An investigation in this regard is on.
Saudi Attorney General Sheikh Saud al-Mojeb confirmed the news saying that prelimenery investigations indicate that Khashoggi died after "discussions" at the consulate devolved into an altercation.
However, he did not disclose any details on the whereabouts of Khashoggi's body.
"Preliminary investigations... revealed that the discussions that took place between him and the persons who met him... at the Saudi consulate in Istanbul led to a brawl and a fist fight with the citizen, Jamal Khashoggi, which led to his death, may his soul rest in peace," the attorney general said in a statement.
Reacting to the news, the White House said it was "saddened" to hear the confirmation of Saudi Arabia's dissident journalist Jamal Khashoggi's death, but made no mention of action against the major US ally.
"We are saddened to hear confirmation of Mr Khashoggi's death, and we offer our deepest condolences to his family, fiancée and friends," White House Press Secretary Sarah Sanders said after the Saudi Arabia issued a statement saying the journalist was killed in a fist fight with unidentified men inside the consulate.
President Donald Trump said he doesn't think he was lied to by Saudi leaders over the death of Khashoggi.
"I think it's a great first step," Trump said on Saudi Arabia's statement which he says he considers credible.
"The United States acknowledges the announcement from the Kingdom of Saudi Arabia that its investigation into the fate of Jamal Khashoggi is progressing and that it has taken action against the suspects it has identified thus far," Sanders said.
"We will continue to closely follow the international investigations into this tragic incident and advocate for justice that is timely, transparent and in accordance with all due process," the White House Press Secretary said.
The Saudi statement confirming the death of Khashoggi in a fist fight did not appear to be credible for some US lawmakers, who demanded that Riyadh be held accountable for the incident.
Senator Lindsay Graham said it's hard to find this latest "explanation" as credible.
"To say that I am skeptical of the new Saudi narrative about Mr Khashoggi is an understatement," he said.
"The claim that Khashoggi was killed while brawling with 15 men dispatched from Saudi Arabia is not at all credible. If he was fighting with those sent to capture or kill him, it was for his life. The kingdom must be held to account. If (the Trump) administration doesn't lead, Congress must," Congressman Adam Schiff said.
House Foreign Affairs Committee Ranking Member Elliott Engel demanded a full account of what happened.
Congressman Jim Costa said that he is appalled by the reports that Saudi officials were involved in the death of Khashoggi.
"As we learn more details of Khashoggi's disappearance, the US must send a clear message that we will not condone such reprehensible behaviour that goes against our American values.
"We must carefully examine both the facts surrounding Khashoggi's disappearance as well as our relationship with Saudi Arabia, and I call on the President to take strong action in unwavering defence of our values. If the President will not stand up to Saudi Arabia, then we in Congress must stand strong for our nation, our values and journalists throughout the world," Costa said.
"Where is the body?" asked Congressman Eric Swalwell.
"Khashoggi's family deserve immediate custody of the remains as they seek some measure of closure," he added.
Khashoggi, who lived in the US as a legal permanent resident and worked for 'The Washington Post', was last seen on October 2 entering his country's consulate in Istanbul.