The militants killed were identified by security sources as Javed Ahmad Kachroo and Idrees Nengroo, both affiliated with Hizbul Mujahideen.
The two militants were killed after an overnight encounter and their bodies were recovered, police said.
Near the scene of the encounter, a civilian youth Asif Ahmad Tantray also died this morning after being hit by a bullet.
Police said Tantray was hit by a "stray bullet" near the scene of the encounter.
The protestors indulgedin stone-pelting on security forces and police, which continued on and off through the day.