Rashtriya Rifles, Central Reserve Police Force (CRPF) and the special operations group (SOG) of state police surrounded the village late on Thursday after receiving information about the hiding militants.
Floodlights were put up around the cordoned off area to prevent the militants from escaping under the cover of darkness.
As the security forces closed on the hiding militants they were fired upon triggering the encounter.
"The slain militants belong to , but their exact identity is yet to be ascertained. Search operation are underway," police said.
Mobile Internet facility has been suspended in Pulwama and Shopian districts