Doda saw an encounter after about four years as it has remained almost free from militancy all these years.
Those killed in the encounter have been identified as Ghulam Nabi Mangnoo alias Maulvi code name Gulla Tailor and Raiz Ahmed, police said.
The duo deserted the police on the night of September 7-8 and ran away with an AK rifle, an INSAS rifle with 60 and 70 rounds, police said, adding they had rejoined militancy.
Acting on a specific information about the presence of SPO-turned-militants in Gadi forest area, Rashtriya Rifles and Special Operation Group (SoG) Doda launched a joint operation last night, Senior Superintendent of Police (SSP), Doda, Zahid Naseem Manhas told PTI.
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"At 4 AM, both the militants were tracked down in Gadi Nullah. As the search operation was going on, the militants, who were hiding in the area, tried to break the cordon and opened firing on the forces, Manhas said.
Maulvi had joined LeT in 2003 and Raiz joined Hizbul in 1999, they said.
"We were tracking them and today eliminated them in an encounter in Gadi Nallah. The area has been free from militancy for the past several years and these two SPOs had run away with weapons but we eliminated them within shortest period", IG (Jammu Zone) Danish Rana said.
"They were trying to revive militancy in Doda district", he said.
Defence PRO S N Acharya added that the bodies have been recovered along with one AK rifle and an INSAS rifle with some ammunition.