According to the report, the group has shortened its name to "Islamic State" and proclaimed its leader Abu Bakr al-Baghdadi as "Caliph" - the head of the state.
"He is the imam and khalifah (Caliph) for the Muslims everywhere," the group's spokesman Abu Muhammad al-Adnani said in the statement, which was translated into several languages and read out in an Arabic audio speech.
"Accordingly, the 'Iraq and Sham' (Levant) in the name of the Islamic State is henceforth removed from all official deliberations and communications, and the official name is the Islamic State from the date of this declaration," he said, according to Reuters.
The Sunni Muslim group follows Al-Qaeda's hard-line ideology, but is not affiliated with Al-Qaeda which has renounced ISIS.
It seeks to re-create a medieval-style caliphate erasing borders from the Mediterranean to the Gulf. It deems Shiiite Muslims to be heretics deserving death.
"It is incumbent upon all Muslims to pledge allegiance to (him) and support him...The legality of all emirates, groups, states, and organizations, becomes null by the expansion of the khalifah’s authority and arrival of its troops to their areas," the statement quoted by Reuters said.
Fighters from the group overran the Iraqi city of Mosul last month in a lightning action and have advanced towards Baghdad. In Syria they have captured territory in the north and east, along the frontier with Iraq.
Jordan on Friday deployed massive army forces on its Iraqi border, including tanks, army vehicles, missile launchers and soldiers, fearing an ISIS move into the Hashemite Kingdom.