A group of militants attempting to infiltrate into Indian territory were intercepted by the security personnel at Govind Nallah in Gurez sector of Bandipore district.
At least two militants were killed in the subsequent exchange of fire. Army reinforcements were rushed to the encounter site.
Initial report said a group of eight was trying to infiltrate into the country by crossing the Line of Control or LoC at the relatively peaceful Gurez, 125 km from Srinagar. Of them, four ran back to Pakistan-occupied-Kashmir, officials said.
The dead have been identified as Major K P Rane, hawaldars Jamie Singh and Vikramjeet and rifleman Mandeep.
The Pakistani forces have been targeting Indian positions at Gurez since Monday night, in what the army believes was an attempt to provide covering fire to the group of heavily armed infiltrators.