"Five militants have been killed in this encounter. All of them belonged to the Hizbul Mujahideen group," a senior police officer told IANS.
The officer said all the slain guerrillas were foreigners belonging to Pakistan.
A huge cache of arms and ammunition has been recovered from the encounter site.
The officer also said the group of guerrillas had infiltrated into the Kashmir Valley about a month back from across the Line of Control (LoC).
"On specific information about the presence of a group of militants in the forest areas of Wangat village in Ganderbal district, troops of counter-insurgency Rashtriya Rifles and the special operations group of the state police launched a joint operation in the wee hours of the morning today," the police official said.
"When the group of militants was surrounded and challenged to surrender, they started firing at the security forces triggering an encounter," he added.