Authorities in Indian-administered Kashmir say the security forces have killed four militants of the separatist Hizb-ul Mujahideen group.
Security forces say a top militant was killed in the fighting
Among the slain militants is Sajjad, alias Tahir, commander of the group, who was most wanted by security forces.
A defence spokesman says the killing of the four militants is the biggest loss suffered by the ultras in winter when the violence has been at its lowest.
Violence in Kashmir has decreased amid India-Pakistan peace moves.
Militants are still fighting to end India's rule in the portion of Kashmir it controls.
Fighting broke out soon after daybreak on Wednesday, and continued until sundown.
The security forces are not known to have suffered any casualties.
Senior Kashmir police official HK Lohia told the BBC that Sajjad had masterminded the abduction and killing of six Nepalese labourers in June 2006.
More than 60,000 people have been killed in Indian-administered Kashmir since 1989 when an armed insurgency began against Indian rule.