Ajay Dhar, a follower in the police department who was posted at Handwara, was shot at by a sentry guarding a temple around 2 am after he failed to stop when asked.
The explosion took place in the house of Ghulam Ahmad Wani at Taratpora in Handwara area of the district around 8.45 pm, the officials said.
The police informed that all three are associated with LeT Tanzeem and were involved in supporting terrorist activities.
During the operation, a militant associate identified as Mujasir Ahmad Lone, a resident of Karen Bala area of the north Kashmir district, was arrested.
The security forces recovered an AK rifle with ammunition, two grenades, Rs 7 lakh in cash, and other war-like stores from them.
IGP Kashmir Vijay Kumar said the killing of the two militants was a big achievement for the security forces.
Biggest arms trafficking racket since 1947: Gang selling ‘guns like veggies’ busted in Jammu and Kashmir's Kupwara
A crack team of Rajasthan Anti-Terror Squad has busted arguably the most powerful illegal arms cartel in India.
Kumar, who was on sentry duty, was hit by a bullet in the head but escaped death because of his protective gear.
The slain officer’s father recalled how he sensed something was not right when he saw the news about the attack on Thursday morning.
Three soldiers and two militants were killed after terrorists attacked an Army camp in Kupwara district of Kashmir, early on Thursday morning.
2 attackers also killed; civilian dies in troops firing on protestors demanding bodies of militants