The bomb disposal expert was killed and three troopers injured while trying to defuse an explosive device near a strategic road tunnel in south Kashmir, police said.
The bomb was placed inside a bag near the Jawahar tunnel - the 2.5-kilometre link between the Muslim-majority Kashmir valley and the neighbouring Jammu region, they said.
The road through the tunnel is the only land route to northern Kashmir from India proper and is used regularly to transport troops and military supplies.
The planned tunnel bombing comes just two days after Indian troops shot dead a high-ranking separatist commander on Saturday.
Security officials claimed to have killed the region's "most wanted" fugitive, Gazi Baba, during a 10-hour clash in Srinagar.
One Indian police office told journalists the latest violence was a direct result of Baba’s death.
The commander headed the Jaish-e-Muhammad group in Indian-controlled Kashmir and was accused by New Delhi of masterminding an attack on its national parliament in December 2001, killing 15 people - including five of the attackers.
Jaish has denied Baba was killed in the Srinagar skirmish, but the region's police chief, Gopal Sharma, said there was no doubt the commander was dead.
Official Indian government figures
show at least 38,000 lives have
been lost in Kashmir since 1989
In another incident, fighters triggered a landmine explosion in the village of Kedar, near Shopian, 50km south of Kashmiri summer capital Srinagar on Monday. Police said there were no casualties.
But five other people were killed in fighting overnight in a fierce encounter between separatist fighters and Indian army troops in the northern Moonabal jungles in Kupwara district.
In the village of Dardpora in Baramulla district, an Indian soldier was shot and three other civilians injured during an exchange of fire between Indian troops and separatists on Monday.
Two other Kashmiris died in separate shootouts in Kupwara and Udhampur districts overnight, police added.
The separatist struggle against Indian rule in Kashmir flared up in 1989.
The last 14 years has claimed more than 38,000 lives, according to Indian officials. Separatists put the toll between 80,000 and 100,000.