The guerrillas were killed in Sopore town, 55 kilometres (35 miles) north of the main city Srinagar, police superintendent Altaf Khan told AFP.
"The encounter broke out last evening when a joint party of police and army confronted the militants and ended with their killing this morning," he said.
The firefight came just two days after security forces recovered a big haul of rifles, pistols and grenades from a roadside dump in Sopore.
For more than 20 years, militant groups in Kashmir have fought against New Delhi's rule, killing police and soldiers in the highly militarised Himalayan region.
The Lashkar-e-Taiba was blamed by India for the 2008 Mumbai attacks that left 166 people dead and US Homeland Security Secretary Janet Napolitano said last week that the group was "in the same rank" as al Qaeda.
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