Algerian soldiers shot dead three Islamist gunmen on Saturday in the Boumerdes area around 50 kilometres (30 miles) east of the capital, the defence ministry said.
All three were killed during a search operation in a mountainous area near Sidi Daoud, 60 kilometres from the city of Boumerdes.
The ministry said that among the dead was a man branded a "dangerous criminal" on the run since 1995, during Algeria's brutal civil war that killed 200,000 people in a decade.
Explosives, guns and a large amount of ammunition were also recovered, the ministry said.
Violence involving armed Islamists has fallen considerably since the civil war of the 1990s, but groups linked to Al-Qaeda in the Islamic Maghreb (AQIM) continue to launch attacks in the northeast, mostly on security forces.