MANILA—Islamist militants in the southern Philippines beheaded Canadian hostage John Ridsdel on Monday, Canada’s Prime Minister Justin Trudeau confirmed.

The Abu Sayyaf group, a small extremist organization with ties to Islamic State that specializes in taking hostages for ransom, had demanded payment of 300 million pesos, of about $6.4 million, each for Mr. Ridsdel and two other hostages, one Canadian and one Norwegian. The hostages were snatched from a resort in the southern Philippines in September. The extremist group had...