The two Azerbaijani nationals were shot dead during a special operation on Wednesday night, the oil-rich Caucasus nation's State Security Service said in a statement, adding that another suspected "terrorist" had been arrested.
The three suspects had been mandated by "foreign radical religious terrorist groups" to create an armed group known as the Caucasus Jamaat to carry out attacks in the country of 9.5 million, authorities said.
"The armed group, the Caucasus Jamaat, has been planning terrorist attacks in Azerbaijan and had links with terrorist organisations involved in armed conflicts abroad," the statement said without giving further details.
In February, Azerbaijan arrested eight men for fighting alongside the Islamic State jihadist group in Syria and Iraq.
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