"In the wee hours, two unknown terrorists were killed in Macchil Sector in an encounter with troops," an Army spokesman said.
Two AK-47 rifles and one UBGL along with other war-like stores were recovered from the site.
The spokesman did not specify whether the slain militants were infiltrating from Pakistan-occupied Kashmir or were already operating locally.
"In spite of heavy involvement of Army in relief and rescue operations, the troops deployed on Line of Control area vigilant," he said.
The spokesman said the operation in Macchil sector is still in progress and further details are awaited.