A terrorist was neutralised by security forces in Dragad Sugan area of Shopian district, police said on Friday.
The identity of the slain terrorist is yet to be ascertained.
The encounter, which broke out in the early hours of Friday, is still underway.
This comes a day after two terrorists were killed in an encounter in Dangerpora area of Sopore district of the state. Incriminating material including arms and ammunition was recovered from the site of encounter.