Army troops guarding the LoC noticed a group of militants attempting to infiltrate from across the border in Nowgam sector of Handwara early on Tuesday, the spokesman said.
The militants opened heavy fire when challenged by the troops, triggering a gunbattle, he said.
Three unidentified militants were killed in the encounter, the spokesman said, adding further details are awaited as the operation was still going on.
The infiltration attempt coincided with the second-phase of polling in Jammu and Kashmir wherein a total of 18 assembly seats, including five in Kupwara district, went to polls.
Last week, four militants were killed when an encounter broke out between the ultras and security forces in Arnia sector of Jammu region close to Indo-Pak border on November 27.
During the terror attack, in all 12 people were killed including five civilians and three army personnel.