The woman Naxalite was arrested and admitted to a hospital, Superintendent of Police Ajay Linda said.
The bodies of the two dead rebels were recovered from the spot, he said.
The SP claimed that bullets hit at least 10 others Maoists, who managed to escape, during the encounter that began around 2 am and lasted till around 4 am near the jungles, about eight km from Latehar Sadar police station.
The encounter comes close on the heels of the killing of three members of a family in the neighbouring Lohardaga district on March 21.
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