"Three militants have been killed in the overnight gun battle at Shatipora village at Handwara, some 90 km from here," a police spokesman said.
The identity and group affiliation of the slain militants was not immediately known, but police sources said the ultras were believed to be affiliated with Lashkar-e-Toiba.
Three AK assault rifles have been recovered from the scene of the encounter, sources said.
They said the house in which the militants were hiding was destroyed in the operation.
As security forces cordoned the area, the militants fired at them. Security personnel retaliated, triggering a gunbattle.