The president described the killing as a “cruel and cowardly” act.
He said that French air strikes which began on IS targets in Iraq last week would continue.
Jund al-Khilafa killed Gourdel, 55, after its deadline for France to halt air strikes on IS in Iraq ran out.
Algeria said it would do everything possible to bring the killers to justice.
“Algeria will never ever bend to terrorism and justice will be done. Our commitment to fight this scourge will grow even stronger,” said Foreign Minister Ramtane Lamamra.
“France is going through an ordeal through the murder of one of its citizens, but France will never give in to blackmail,” Hollande told the UN General Assembly.
“The fight against terrorism must continue and be stepped up.”
He said that French air strikes which began on IS targets in Iraq last week would continue.
“We will continue to fight terrorism everywhere, notably against the group we call Islamic State, which spreads death in Iraq and Syria, pursues civilian populations, persecutes religious minorities, rapes, beheads,” he said.
Speaking on the sidelines of the assembly, the president said that Gourdel – who was seized on Sunday – was dead because he was the representative of French people who “defend human dignity against barbarity”.
“France will never cede to terrorism because it is our duty, and, more than that, because it is our honour.”