On a specific information, police assisted by security forces launched a search operation in Hejzam area of Mahore tehsil, 190 kms from here.
Militants fired on the operation party when they closed in on a hideout.The joint operation party fired back resulting in the encounter, a police official said.
While a militant was killed, two other ultras were still in the cordon, he said.
The encounter was going on when reports last came in from the area.