In the footage, they threaten more attacks on the streets of Paris, Marseilles and Nice and call out President Francois Hollande before taking the small knives to decapitate the two victims.
The identities of the victims is still unknown, but there is speculation on forums the light-haired victim on the right in the video is European.
They are then brutally murdered in front of a big crowd which includes children as cars drive by sounding their horns.
Both victims talk in pre-recorded filming on the video and news footage of the Nice attack in which Mohamed Lahouaiej Bouhlel killed 84 people when he drove his truck through huge crowds celebrating Bastille Day.
After the two men are decapitated using small, serrated blades, children are interviewed about the beheadings.
Neither man put up a struggle when they are bundled to the floor face-down and have their heads pulled up as the executioners hunch over their bodies and dismember them.
One of the executioners holds the head of one victim to the camera as he continues his rant.
Both heads are then placed on their bodies' back facing the crowd, Daily Mail Reports.
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