The incident occurred around midnight when policemen were checking few buses at a bus station at Suryapet in Nalgonda district, about 130 km from here.
Two suspects, who were being questioned by the police opened fire killing a police constable and a home guard. A police inspector and a home guard were also injured.
While fleeing, the two suspects also opened fire on a car, injuring a civilian.
Police sounded an alert in the region and launched hunt for the two assailants.
A police officer said a police party was conducting checking of vehicles following a tip-off that two suspects are travelling in a bus, coming from Vijayawada to Hyderabad.