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A spokesman said the incident occurred around 0840 IST in the forest near Kodisala village in Tadwai mandal of the extremist-affected district.
Receiving a tip-off about a group of naxalites camping in the area, a special police party rushed to the spot for combing operations.
The naxalites opened fire seeing the policemen. In the exchange between the police and the Pratighatana dalam [armed squad] led by Mohan, three naxalites, including two women cadres, were killed on the spot.
The police recovered a 8 mm gun, a 12-bore gun, a pistol and seven kitbags from the scene of encounter.
The police said at least four naxalites escaped from the scene. Combing operations have been launched to track them down.