Acting on a tip-off, the body was recovered from the Tral area of the district, a police official said.
He added that the slain terrorist, apparently a foreign national, was killed in an explosion which took place while explosives were being assembled in a hideout.
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Director General of Police (DGP) S P Vaid said the slain terrorist belonged to the JeM and that he was killed in an explosion while an improvised explosive device (IED) was being fabricated in a hideout.
"While fabricating IED in a hideout near Handura Aripal Tral explosion took place in which one terrorist of reportedly JEM died whose body has been recovered by J&K Police/SF (security forces) (sic)," he wrote on Twitter.
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