"Two militants have been gunned down and two AK rifles recovered from the spot," a senior police officer said.
The militants, Nissar Ahmad Mir and Mohammad Ibrahim Janwari, both locals, were hiding in Nihalpora village of Pattan and were wanted in a number of militancy related cases, he said.
The operation was a "major breakthrough," he said, adding that security forces had received specific information about the presence of the duo in the village.
They were asked to surrender after being trapped in the wee hours this morning, but they refused and instead opened fire, the officer said.
The house they had taken shelter in was partially damaged in the gunbattle, he said.