Ghulam Qadir alias Tohid-ul-Islam, a self-styled Hizbul Commander, was killed in Bhimdasa area in Ramban in a joint operation by police and army last night.
Said to be the last surviving "Hizbul Commander" in Ramban, he was neutralised after an hour-long exchange of fire.
An AK-56 rifle, three magazines and 54 rounds were recovered from hin, police said.
The militant was reportedly on his way home when he was intercepted by security forces, and in the ensuing gunbattle he was killed.
In Jammu, IGP (Jammu Range) Dilbagh Singh said it was the "biggest achievement" of security forces in recent times.
He said Qadir was active in the area since 2006 and was involved in several militancy-linked crimes including killing of three armymen.
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Dilbagh said now only 29 terrorists were active in the Jammu region, including four in Ramban and seven in Kishtwar.
Asked whether the terrorists could pose a threat to the upcoming Amarnath Yatra, he said "they were alive last year also but we will try to keep them away from the national highway to ensure safe passage of piligrims."
The IGP said they had so far not received any specific inputs about militants targeting the annual pilgrimage.
He said additional security force personnel would be deployed during the pilgrimage.