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Top counterterrorism official Monirul Islam said police raided a two-story house in Narayanganj district near Dhaka and killed the suspects early Saturday.
The dead included Tamim Chowdhury, a Bangladeshi-born Canadian, who police believe was one of two masterminds of the attack on a popular restaurant in Dhaka.
The militants belonged to the banned group Jumatul Mujahedeen Bangladesh, or JMB, Bangladesh’s police chief A.K.M. Shahidul Hoque told reporters.
>> Watch more on FRANCE24.com: Expert says Bangladeshi government in denial of its terrorist problem
Chowdhury was the mastermind of the July 1 attack in Dhaka and another attack on an Eid congregation outside Dhaka on July 7 marking the end of the holy Muslim month of Ramadan, he said.
Bangladesh police have been conducting raids across the country to hunt those behind the attack.
The police chief said security officials raided the house acting on a tip that Chowdhury, along with other suspects, was hiding in the building. The suspects opened fire at officials who retaliated, he said.
A SWAT team made the final push and fatally shot the suspects after they failed to surrender. Haque said the team asked them to give themselves up but they went on firing.
The Islamic State group had claimed responsibility for the restaurant attack, but authorities have denied that all along, saying it was the act of the JMB and that the IS has no presence in the Muslim-majority country.
The attack on the upscale Holey Artisan Bakery in Dhaka that killed 20 people, including 17 foreigners. The July 7 attack on the prayer gathering north of Dhaka left four people dead, including two police officers.