Ishaq and his sons, who had been arrested last week, were being moved to another location when gunmen attacked the police convoy in Muzaffargarh district of Punjab province late last night to free him following which a shootout took place, they said.
The death of the LeJ chief, believed to be either 55 or 56 years of age, is a huge blow to the LeJ which is involved in killing of hundreds of Shias and has been accused of developing links with the Islamic State.
At least six policemen were also injured in the encounter which lasted for more than two hours, they said.
A top police officer said Ishaq, his sons and three other militants were taken to Shahwala in Muzaffargarh by Counter- Terrorism Department (CTD) for recovery of weapons and on their return they were attacked by LeJ militants.
More From This Section
"The militants were freed by the attackers who fled on motorbike," he said.
"In the clash, 14 militants were killed, including Ishaq and two sons, while three policemen were injured," he said.
Citing a spokesman of CTD, local media reported that Ishaq was killed by the attackers to avoid his arrest.
The LeJ chief, belonged to Rahimyar Khan district of Punjab and was one of the founders of the group set up in mid- 1990s, was involved in several murder cases and was arrested in 1997. He was kept in jail for 14 years and released in 2011.
He was also believed to be the mastermind of 2009 attack on the Sri Lankan cricket team in Lahore.
LeJ, with ties to Al-Qaeda, had claimed responsibility for January 2013 blasts in the southwestern city of Quetta that killed over a hundred members of the Shia Hazara community. The outfit was banned more than a decade ago by former president Pervez Musharraf.