They said that the three militants were involved in an attack on Police party in which a constable of J&K police was killed.
The troops killed the youth during a cordon and search operation in Aglar Kandi village of the district.
He informed Rising Kashmir that the search operation was jointly launched by 44 RR, Special Operations Group (SOG) of Jammu Kashmir and para-military forces.
According to local sources, the intermittent exchange of firing was going on between the militants, who are hiding inside a residential house, and the government forces.
A civilian was also injured in the gunfight.
The Internet services in Pulwama have been withdrawn in view of growing tensions, a report said. A villager - Tariq Ahmad Bhat - was hospitalised after sustaining a bullet injury on his chest when massive clashes broke out between security forces and residents during the encounter.