39-year-old Colonel Santosh Mahadik, Commanding Officer of 41 Rashtriya Rifles, was critically injured during the operation in the Haji Naka forest area of Kupwara near the Line of Control (LoC) with Pakistan-occupied Kashmir, officials said.
He was immediately evacuated to a hospital but he succumbed to injuries, the officials said.
A police constable was also injured in the firing and was undergoing treatment.
The operation to track down the militants was continuing when last reports were received, the officials said.
The party of army and police came under fire when it was conducting searches as part of an operation started on November 13 to flush out terrorists hiding in the forest area on the basis of a specific information.
An Army jawan was injured on the first day of the operation.
Col Santosh leaves behind wife and two children, aged 11 and five years, the defence spokesman said, adding the Army is committed to providing all support to the family in this hour of grief.
The spokesman said the Colonel was a true soldier and had conducted many successful counter-terrorist operations.
General Officer Commanding-in-Chief of Northern Command Lt Gen DS Hooda has expressed deep condolences on the loss of this brave Commanding Officer.
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