Security forces had launched a cordon and search operation in Panzgam area of Awantipora early Saturday morning following specific information about the presence of militants there, an Army official said.
He said as the forces were conducting searches in the area in south Kashmir, the militants fired at them.
The forces retaliated and in the ensuing encounter, two militants were killed, the official said.
The identity and group affiliation of the slain militants are being ascertained.
The operation is in progress, the official said.