The gun battle took place in Akakhel village in Khyber tribal district as paramilitary troops were carrying out a search operation.
"Two paramilitary soldiers were killed and eight others were wounded in gunfight with militants," Khyber administration chief Mutahar Zeb told AFP.
A senior paramilitary official confirmed the clash and casualties.
The search operation came in response to a roadside bomb that hit a convoy of security forces, killing at least two soldiers and injuring another eight.
(Read: “Roadside bomb kills 3 soldiers in Khyber Agency: Officials”)
The attack comes a day after a teenage suicide bomber blew himself during the Friday prayers at a local mosque in Jamrud.
(Read: “Suicide blast in Jamrud mosque: 56 killed, 123 injured”)
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