The two were gunned down after a brief encounter that saw the duo running for their lives.
"On specific information, a joint operation was launched in Aribagh in Nowgam area on the outskirts of Srinagar city. It was around 4:15 pm that a contact was established with the two hiding terrorists in a house there. In a very brief encounter, both the terrorists were killed," Inspector General of Police, Kashmir, Munir Khan said.
Khan said the other terrorist has been identified as Abu Qasim alias Chota Qasim.
"The bodies of the slain terrorists have been kept at the appropriate place for appropriate disposal," he said.
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The IGP said two AK rifles, UBGLs and other material were recovered from them.
He said Ismail was involved in 15 cases including the July 10 attack on a bus carrying Amarnath yatra pilgrims in south Kashmir's Anantnag district which left eight of them dead.
"The day they (militants) killed yatris, the people said that such they should be brought to justice and today they have been brought to justice. It is a great success for the security forces. A chapter of these terrorists has been closed. Tomorrow will be a new day for us. We will start our work afresh.
He thanked the people for "expressing that sentiment that time because that was against Kashmiriyat. No Kashmiri liked that".
Asked whether all the militants behind the attack have been neutralised, the IGP said "One foreign and one local terrorists are left."
"It is better not to ask such questions because they are operational details which we do not want to divulge. It is not that whole militancy has been wiped out by their killing. So, it is better not to divulge the details," he said.
Khan said the priority of the security forces is to neutralise the militant leadership in the valley.
"Militant leadership is important to be neutralised. That has to be eliminated because they not only are militants but also provoke and motivate children. The priority is to neutralise the militant leadership. You know who are the leaders and they will be our next target," he said.
Maj Gen Raju said Ismail's killing is extremely important because he was responsible for the death of about 14 security forces personnel and eight civilians.
"This success is also important because we are expecting vacuum in the foreign terrorists' leadership of the LeT. After the death of Abu Qasim, then Abu Dujana and now Ismail. In between we also killed (Abu) Ali. Now, we are looking at a serious deficiency in their leadership which should give us more opportunities," he said.