Police said the nine terrorists were killed while one was captured alive during the operation codenamed 'Storm 26' to flush out militants holed up in an apartment at a six-storey building in Kalyanpur area.
Prime Minister Sheikh Hasina said Bangladesh averted a major terror attack.
"The country averted a fearful situation because of the (security) raid," she said.
Police's special SWAT unit, elite anti-crime Rapid Action Battalion (RAB) and detectives jointly raided 'Jahaz Building' around 5:51 AM local time, sparking a gunfight that last for an hour.
"From police intelligence sources we learnt that they were planning to carry out a major incident. We conducted the operation to foil any such incident," national police chief A K M Shahidul Hoque told reporters.
Dhaka's joint police commissioner Sheikh Maruf Hassan said the security forces arrested one militant with bullet wounds from the scene during the special raid.
"They (militants) are primarily presumed to be a part of the group that carried out terror attacks in Gulshan (restaurant) and (northern) Sholakia," Hoque said.
The Islamist gunmen wearing black tunics, turbans and carrying backpacks exchanged fire and shouted "Allahu Akbar" (God is the Greatest).
Dhaka's police commissioner Asaduzzaman Mia later told a media briefing that terrorists were "highly educated".
"We seized 13 handmade grenades, one sword, one pistol, seven magazines and bullets from the den...Along with other evidence like 'Allahu Akbar inscribed black flags," he said.
But the police chief said police found no evidence of ISIS link. Security analyst believe that JMB is ideologically inclined to the Syria-based outfit.
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