Officials said six smugglers had attempted to enter Pakistan from the Indian side near Aichugill village yesterday when they were challenged by Pakistan Rangers personnel.
They said the men fired at the Pakistan Rangers, who returned fire, killing two of them instantly.
Two others were arrested while the others managed to flee.
The dead men were identified as Aqeel Shah of Muridke, and Muhammad Kamran of Pattoki. Both were in their twenties.
The border guards seized 150 bottles of liquor and cigarette cartons from the smugglers.