One of Jaish-e-Mohammed's top commanders and its number one in Kashmir, Qari Asif, was killed in a fierce gun-battle with security forces in Sogam, 120 km north of Srinagar on Thursday.
Qari's deputy, Irfan, and three other militants were also killed.
Defence sources said security forces on specific information mounted searches in the Sogam forest area early in the day and came under fire from militants.
"Troops returned fire and gunned down five top militants," said an army spokesman.
The killing of Qari is a big setback for JeM in Kashmir. He had replaced Gazi Baba, the mastermind of December 2001 Parliament attack. Gazi Baba was killed by the Border Security Force last year.
Huge quantities of arms and ammunition were recovered from the encounter site.
Defence sources said troops also gunned down Mohammad Shakeel, district commander of Lashkar-e-Tayiba in another gun battle at Chornar in Kupwara district.