The "terrorist group of nine criminals" died after clashes with the army in the Taoundert border area yesterday, 80 kilometres (50 miles) west of Tin Zaoutine in Tamanrasset province, the APS news agency quoted a ministry statement as saying.
It said eight automatic Kalashnikov-type rifles, an RPG-7 rocket launcher technical equipment and a "large amount" of ammunition were seized.
The clampdown came after "effective use of information on suspicious movements of a terrorist group," said the statement.
On Thursday, Al-Qaeda in the Islamic Maghreb (AQIM) had claimed responsibility for an April ambush in Algeria's restive Kabylie region that killed 11 soldiers.
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The 77-year-old, who had cast his vote from a wheelchair, has long been seen as the leader who helped restore stability to Algeria after the devastating civil war of the 1990s.
Islamist-linked violence rocked Algeria in the 1990s but has declined considerably in recent years, although jihadists still operate in the mountainous Kabylie region.
The previously biggest attack there by Islamist groups was in April 2011, when 10 soldiers were killed at a military post in Azazga, east of the regional capital Tizi Ouzou.