Two militants were killed and one arrested in Srinagar city centre on Monday evening.
Preliminary reports suggest that a surgical operation was carried out in Sarai Bala area in the evening.
Two militants were killed and one militant arrested in the operation, a top police official said.
Initial inquiry revealed these militants belonged to the Jaish-e-Muhammad and had set up base in Srinagar to carry out a major attack.
Earlier in the day, militants struck at two places in the city and killed three policemen.
The operation was on when last reports came in.