The deceased, identified as Nayeemuddin alias Nayeem, was wanted for last many years in cases of murder, killings for gain, extortion and kidnapping.
The incident occurred when police teams, while tracking a case of attempted extortion registered in Nizamabad district, came under fire from a suspiciously moving SUV on the outskirts of Shadnagar, said Rema Rajeswari R, Mahabubnagar SP who was supervising the situation at the scene.
"However, after noticing the police team, one of the persons, who was driving the SUV, opened fired at police and fled. Meanwhile, another person got down from the vehicle and he too tried to fire at police and in retaliation police fired at him resulting in his death," the SP said.
The officer said that police fired in "self-defence".
"In retaliatory firing by the police, one of the gunmen was shot dead, who was identified as Nayeem," the SP said, adding no police personnel was injured in firing.
Apart from other cases, Nayeemuddin was wanted for allegedly shooting dead IPS officer K S Vyas at L B stadium in the city in 1993.
The gangster hailed from Nalgonda in Telangana.
Further investigation into the incident is on, police said.
