Police officers in Khash, Sistan and Balouchestan Province, became suspicious of two vehicles in the area after receiving reports from local residents about suspicious movements.
The occupants of the vehicles opened fire on police officers, prompting an exchange of gunfire in which one armed individual was killed, the report said.
Police have launched efforts to identify and arrest the two remaining individuals who escaped following the clash.
During the operation, officers seized both vehicles and recovered a Kalashnikov rifle, four magazines and 77 rounds of live ammunition.