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Marwan Qawasmeh and Amer Abu Aisha have been in hiding in the West Bank since June.
Israeli forces killed two Palestinians suspected of kidnapping and murdering three Israeli teenagers in June, information from this Israeli military source.
Spokesman Peter Lerner said troops searching for Marwan Qawasmeh and Amer Abu Aisha surrounded a building in the West Bank city of Hebron where the men were hiding.
So far, the Israeli military has confirmed that one of the two was killed in an exchange of fire.
They believe the other one died as well, but are awaiting formal confirmation.
