The deceased LeT militant, Hilal Molvi, was one of the most wanted terrorist in north Kashmir and was also accused of killing panchayat leaders in the state.
The encounter started after the police surrounded a residential house in the crowded area on receiving specific information about Hilal's presence.
Authorities were yet to confirm what the terrorist was doing in Srinagar since he was a man from northern part of the state. Sources said he was perhaps on a mission to carry out a major mission in the state capital.
The operation was ended later after it was confirmed that no more terrorist was hiding in the vicinity. No damage occurred to any civilian life or property, the Srinagar district police said.