Jaysh al-Islam members wearing orange outfits are seen killing 18 men dressed in black, reversing the imagery of beheadings by the jihadist group.
According to the rebel group, the IS militants are being shot in revenge for the recent beheading of three Jaysh al-Islam fighters.
The Saudi-backed group also accuses IS of being allied to Syria's government.
At least 1210 people have been killed following an eighteen months of fierce battle between IS and rebel groups, who have denounced the jihadists' brutal tactics and mistreatment of civilian opposition supporters, have left thousands dead.
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The rebel group which is led by the former imprisoned Salafist activist Zahran Alloush, Jaysh al-Islam (Army of Islam) has been battling IS in the Ghouta agricultural belt around Damascus.
Sectarian language
The 20-minute video clip published on Jaysh al-Islam's website on Tuesday mimics those produced by IS to announce the killing of government soldiers and Western hostages.
It includes similarly sectarian language, with IS members accused of betraying their fellow Sunni Muslims and allying themselves with "enemy Shia" and "Nusayris", a derogatory term for the heterodox Alawite sect to which President Bashar al-Assad belongs.
But in a clear subversion, the alleged IS fighters dressed in black robes with black balaclavas are shown being marched in chains through the Syrian countryside by armed men wearing the orange clothes which IS captives have been forced to wear before their deaths.
The last part of the video shows the 18 men in black kneeling before their Jaysh al-Islam captors, who remove their balaclavas before shooting them in the head with rifles.
Analysts say the video marks a further escalation in the conflict between Syrian rebels and IS.
