Security forces launched a cordon and search operation in Hajin area following information about the presence of militants there, a police official said.
He said the search operation turned into an encounter after militants opened fire towards security forces positions.
One militant has been killed in the operation, the official said adding searches were still going on.
The identity of the slain militant is yet to be ascertained.
On Wednesday, four policemen lost their lives in a terrorist attack in South Kashmir's Shopian district. According to the police, a police party came under indiscriminate firing by a group of terrorists during the afternoon hours in Shopian's Arhama.
This came after two terrorists from Hizb-ul-Mujahideen were gunned down in an encounter in Jammu and Kashmir's Anantnag district.
