SSP Malir Rao Anwar told the media that the three terrorists affiliated with the al-Qaeda in the Subcontinent (AQIS) were killed in Karachi's Gulshan-e-Bunair area.
"One of those killed is known as Muhammad Riaz a key figure of the AQIS," he said.
Anwar said the gun battle had ensued after the police raided a locality on a intelligence tip-off about some terrorists hiding out there.
"They all belonged to the banned outfit and were wanted in many cases of kidnappings, looting and target killings."