Four policemen and a militant were killed on Sunday after a gun battle in Kashmir's main city, police said.
The encounter, the first in past eight months in Srinagar, Kashmir's summer capital, broke out after police raided a militant hideout.
"Militants hiding in a house fired indiscriminately. We have lost four policemen," Srinagar police chief Syed Ahfadul Mujtaba said.
He said a top militant of Pakistan-based Lashkar-e-Taiba militant group was also killed.
The violence comes days after rebels exploded a powerful bomb in the heart of Srinagar, killing one person and wounding about two dozen.
Rebel violence has fallen across Kashmir after India and Pakistan started a slow-moving peace process in 2004, officials say.
But people are still killed in daily shootouts and occasional bomb attacks.
The Indian army said this month it expected militant incursions from Pakistani Kashmir to increase once the snow starts melting along the mountainous border region as summer approaches.
More than 42,000 people have been killed in Jammu and Kashmir since 1989. (Reuters)
Four policemen and one rebel killed in Kashmir clash