It is the first time Britain has carried out such an attack.
The drone strike was carried out last month, targeting British citizen Reyaad Khan.
It also killed fellow Briton Ruhul Amin and another IS fighter.
While the United States has carried out drone attacks against its own citizens for more than ten years, it marks the first known targeted attack by Britain on one of its own citizens.
Speaking about the deaths in the British parliament, Prime Minister David Cameron has defended the strike as "entirely lawful".
He also confirmed a third Briton, Junaid Hussein, also believed to be fighting with IS, died in a drone strike by the United States.
"I'm clear that the action we took was entirely lawful. The Attorney-General was consulted and was clear there would be a clear, legal basis for action in international law. We were exercising the UK's inherent right to self-defence. There was clear evidence of the individuals in question planning and directing armed attacks against the UK."
During the session in the House of Commons, Acting Labour Party Leader Harriet Harman asked the Prime Minister why Khan was deliberately targeted in the attack.
"What was it about this individual and his actions that singled him out from all that has gone before? Did he represent an ongoing threat, or was the threat based on a specific act he was plotting?"
Mr Cameron insisted the drone strike was necessary to national security.
"We should be under no illusion, their intention was the murder of British citizens. So, on this occasion, we ourselves took action."
Mr Cameron also said he supported Britain extending its bombing campaign against I-S to Syria as well as Iraq.
But he stressed he would return to parliament for formal authorisation.
Mr Cameron's government was defeated on taking military action in Syria in 2013 in one of the most damaging foreign-policy blows to his previous coalition government.
A family friend of Reyaad Khan has told the BBC he is shocked by the killing.
"It is shocking for us as a local community. It is a devastating situation for the family as well as the local community. I believe what the RAF has done, maybe in terms of British interest they have done (it), but, obviously, there are a lot more questions to answer."
Estimates range between 500 and as many as 2,000 British nationals have travelled to fight in Syria.
Speaking in a video years before he left Britain, Reyaad Khan said he hoped to one day become prime minister and was determined to reduce crime rates in his neighbourhood.
Asked by a reporter if he thought the world was an evil place or a lovely place?, he replied, "The world can be a lovely place. But you've just got to get rid of the evil. There's a bit of both. If everyone can choose the good, then the evil will go away."
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