'The gunfight is now over and searches are continuing in the area,' he said.
One of the slain guerrillas has been identified as Pasha of Hizbul Mujahideen and the other as Musa who initially operated with the Lashkar-e-Taiba (LeT) but had recently joined the Hizbul Mujahideen.
The house in which the guerrillas were holed up was destroyed in the gun battle.
Police said both slain guerrillas were Pakistani nationals and Pasha had been active in guerrilla activities in north Kashmir for nearly eight years.
In another gunfight Tuesday in Tungmulla forests of the north Kashmir's Baramulla district, a navy commando, a security personnel and two guerrillas were killed.
As security forces challenged the guerrillas hiding in a forest, they started firing, triggering a gun battle.