In late afternoon, security forces cordoned off Gadoora village in Pulwama district after getting specific information about presence of some militants in a house, officials said.
The hiding militants opened fire on security personnel, triggering an encounter, the officials said, adding the exchange of fire was going on when last reports were received.
Meanwhile, groups of youth staged protests and tried to march towards Gadoora village where the encounter was underway, the officials said.
The clashes were still continuing when last reports were received.
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Additional deployments were also made to deal with any law and order situation, they said.
Meanwhile, security forces were hunting for some militants who had fired at a patrol party this morning in Sheikhpura village in Kupwara district.
He said while no casualties were reported in the brief firing, security forces were carrying out search operations in the area to track down the militants.