Dilbagh Lamma was shot dead from point-blank range and he was found with his hands tied by a rope, said Tarn Taran SSP Manmohan Sharma.
Another gangster Ankul Khatri, who was wanted in over a dozen criminal cases, was injured in the shootout and has been admitted to a hospital in Amritsar, he said.
The SSP said around 100 empty bullet shells were found at the scene of the crime on Batt road last night.
Dilbagh, a resident of Patti village in the district, was wanted in several criminal cases, according to the police.
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