Troops of 53 Rashtriya Rifles noticed 2 motorcycle-borne youths, moving in suspicious circumstances, near their camp at Dalwan and signalled them to stop.
They did not pay any heed to the signal and tried to speed away, the sources said.
The troops opened fire at the youths wounding one of them, they said adding a weapon fell off from the hand of the injured militant in the process.
The militant tried to pick up the weapon but was shot dead by security forces, the sources said.
Initial investigations revealed the slain youth was LeT militant Tauseef Ahmad Dar, hailing from neighbouring Pulwama district, the sources said.
The accomplice of the slain militant managed to escape, they said.