The terrorists were shot dead after they opened fire on a raiding police party near the northern bypass area on the outskirts of the city, Senior Superintendent of Police Rao Anwar said.
"We had sent a raiding party acting on an intelligence tip-off but they retaliated with heavy firing and were killed in the return fire," he said.
Anwar said that those killed were involved in various terrorism-related incidents in Karachi.
"One of them has been identified as Ibrahim alias Afia who is wanted in many terror-related cases including attacks on police and rangers," the officer said.