Three others, including one carrying a reward on his head, were arrested. The driver of the car escaped.
"Five armed men in a car opened fire at a team of Delhi Police's Crime Branch officials in the Alipur area after they were asked to stop," said a police officer.
Police retaliated and apprehended the criminals after a short chase.
"A criminal, Rakesh, was killed in the shootout. Three have been arrested and one managed to flee," Additional Commissioner of Police Ravindra Yadav told IANS.
Rakesh from Bahadurgarh in Haryana, was wanted in two murder cases in Haryana and Punjab. After the shootout, during which he was injured, he was taken to Babu Jagjivan Ram Hospital where he died during treatment.
He was shot in his waist, police said.
One of the arrested, Manoj Morkheri, had a reward of Rs 1 lakh on his head and was wanted in various cases of abduction for ransom, extortion and attempt to murder in Delhi, Haryana and Rajasthan, Yadav said.
A resident of Haryana's Rohtak, Morkheri had killed retired inspector Ramkishan in Haryana in January over an issue of personnel enmity.
"He had dared Haryana Police and said that he would kill Ramkishan," Yadav said.
The other two who were arrested are Vivek and Praveen. Two pistols and live cartridges have been recovered from their possession.
Rinku, the car driver, is on the run.