According to unconfirmed reports, one of the militants was Shamil Gasanov, the head of the Shariat Islamist group. However, Gasanov's death has already been reported a number of times by Russian special forces, including in January 2007.
The source said two assault rifles and a pistol were captured in the night operation. He added that two improvised explosive devices belonging to the Islamists had exploded during the operation, subsequently starting a fire, but that this had now been extinguished.
One special forces soldier was killed, and another one was wounded in the shoulder during the operation.
A top Chechen warlord, Rappani Khalilov, was also reported killed in another operation in the city Tuesday.
A large-yield improvised explosive device was discovered in Makhachkala Friday.
"The explosive device was combat-ready. If it had been activated in a residential area or on a road, the casualties would have been horrible", an Interior Ministry source told RIA Novosti Friday.
Although the active phase of the North Caucasus anti-terrorism campaign officially ended in 2001, periodic bombings and clashes between gunmen and federal troops still disrupt Chechnya and nearby regions, including Daghestan, Ingushetia, Kabardino-Balkaria, and Karachayevo-Circassia.