Shakeel Ansari of Hizb al-Mujahidin was shot dead by police on Tuesday during a firefight in Pandach, a village on the outskirts of the state capital Srinagar.
Ansari was a resident of Marmat, a remote hamlet in mountainous Doda district where Muslim separatist fighters have been active over a period of time.
"We believe he was also working as the deputy chief operational commander of the Hizb and apparently for this purpose had been asked to move into the Valley from the Jammu region," said a senior police official.
Hizb al-Mujahidin representatives have yet to comment on the killing but Kashmir analysts say the organisation has suffered a huge loss.
Former commander Abd al-
Rashid was killed on 6 May
Ansari’s elder brother Farooq Ansari, was killed four years before by Indian security forces, resulting in the younger Ansari taking the post as regional field commander for Jammu.
On Thursday, its chief operational commander Peer Abud al-Rashid Shardar, also known as Ghazi Shahabuddin, was killed by police.
The Hizb claimed that Ghazi was arrested from Sangrama, a village about 45km northwest of Srinagar a day earlier, brought to the summer capital and shot dead in "cold blood".
Police officials denied the charge saying that the fighter was under close surveillance which allowed the police to capture "the big fish we were looking for."
They also said that they came under heavy fire from unknown assailants while cordoning off the area. Two policemen were injured.
Gazi Misbahuddin replaced the slain chief operational commander.
Official statistics say more than 40,000 people have died in the 15-year-old Kashmiri uprising against Indian rule, but local human rights groups put the toll at twice as high.