Sources said security forces engaged Maoists in the forests of Lebed village during a search operation and in the ensuing firing, a Naxal leader identified as Ramesh Pahan was killed.
The body has been recovered, a security official said.
Another suspected Maoist, Lal Mohan Pahan, has been apprehended from the spot along with two .12 bore rifles by the security forces, which also included state police.
The location where the encounter took place had a Naxal hideout which was destroyed during the encounter by the security forces, the sources said.