"Based on their initial findings, the police believe that the journalist was killed by a team especially sent to Istanbul and who left the same day," the official told AFP on Saturday.
It came hours after police confirmed that around 15 Saudis, including officials, arrived in Istanbul on two flights on Tuesday and were at the consulate at the same time as Khashoggi.
The Washington Post contributor had gone to the consulate on an administrative errand but "did not come back out" of the building, police had told the state-run Anadolu news agency.
On the back of the preliminary investigation, Ankara announced Saturday it had opened an official probe into his disappearance.
The state-run Saudi Press Agency, quoting an unnamed official at the Istanbul consulate, denied the reports of Khashoggi's murder.
"The official strongly denounced these baseless allegations," the agency wrote, adding that a team of Saudi investigators were in Turkey working with local authorities.
Reacting to news of the alleged murder, the journalist's Turkish fiancee, Hatice Cengiz, said on Twitter she "did not believe he has been killed".
In his columns, Khashoggi has been critical of some policies of Saudi Crown Prince Mohammed bin Salman and Riyadh's intervention in the war in Yemen.
The former government adviser, who turns 60 on October 13, has lived in self-imposed exile in the United States since last year to avoid possible arrest.
- 'We have nothing to hide' -
Press freedom campaigners condemned reports of Khashoggi's possible murder, with the New York-based Committee to Protect Journalists demanding Riyadh give "a full and credible account" of what happened to him inside the consulate.
Reporters Without Borders (RSF) said on Twitter that if reports of Khashoggi's death were confirmed, "this would constitute a horrific, utterly deplorable, and absolutely unacceptable assault on press freedom".
Prince Mohammed said in an interview with Bloomberg published Friday that the journalist had left the consulate and Turkish authorities could search the building, which is Saudi sovereign territory.
"We are ready to welcome the Turkish government to go and search our premises," he said, adding that "we will allow them to enter and search and do whatever they want to do... We have nothing to hide".
The Saudi crown prince also said he understood that Khashoggi had entered the consulate but then "got out after a few minutes or one hour".
"We are investigating this through the foreign ministry to see exactly what happened at that time," he added.
According to his fiancee Cengiz, Khashoggi had visited the consulate to receive an official document for his marriage.
Turkey's foreign ministry on Wednesday summoned Saudi Arabia's ambassador over the issue.
A spokesperson for the US State Department said: "We are not in a position to confirm these reports, but we are closely following the situation."
- 'Reasoned criticism' -
Khashoggi fled the country in September 2017, months after Prince Mohammed was appointed heir to the throne, amid a campaign that saw dozens of dissidents arrested including intellectuals and Islamic preachers.
The journalist said he had been banned from writing in the pan-Arab daily Al-Hayat, owned by Saudi prince Khaled bin Sultan al-Saud, over his defence of the Muslim Brotherhood which Riyadh has blacklisted as a terrorist organisation.
He has also criticised Saudi Arabia's role in Yemen, where Riyadh leads a military coalition fighting alongside the government in its war with Iran-backed rebels.
The Washington Post chose to leave a blank space where Khashoggi's column would have been in its Friday edition in support of the missing writer.
In an article published by Al-Jazeera this week, journalist and analyst Bill Law described Khashoggi as "a brilliant journalist with a fiercely independent mind but with sufficient pragmatism to know just how close to the red lines he could go".
"His is a voice of reasoned criticism and wise comment that the Saudi crown prince should listen to," wrote Law, who said he had known Khashoggi for 16 years.
Saudi Arabia, which ranks 169th out of 180 on the World Press Freedom Index issued by Reporters Without Borders (RSF), has launched a modernisation campaign since Prince Mohammed's appointment as heir to the throne.
But the ultra-conservative kingdom, which won plaudits in June for lifting a ban on women driving, has drawn heavy criticism for its handling of dissent.
Khashoggi's criticism of Prince Mohammed's policies have appeared in both the Arab and Western press.
In a March 6 Guardian editorial co-authored with Robert Lacey, he wrote: "For his domestic reform programme, the crown prince deserves praise. But at the same time, the brash and abrasive young innovator has not encouraged or permitted any popular debate" on the changes.