The rebel, who suffered bullet shots in the encounter, succumbed on way to a hospital, Deputy Inspector General of Police Arun Kumar Singh said, adding that he was later identified as a "member" of the CPI (Maoist).
Two guns and four cartridges were recovered from the spot, the DIG said.
This is the second encounter between the rebels and the para-military forces in the district since yesterday.
CRPF and the district police were engaged in a gun battle yesterday in the Porahat forests after the security forces rushed there following reports that six bodies of villagers were buried after being killed during retaliatory clashes between sections in two villages, and that there was Maoist involvement in the violence.