Troops from the anti-rebel Greyhound force raided the rebel hide-out after receiving a tip that several senior leaders were in the forests of Mahbubnagar, said local police chief K. Srinivas Reddy.
Mahbubnagar, in the southern state of Andhra Pradesh, is 50-kilometers (31 miles) south of Hyderabad, the state capital.
Two regional leaders, identified as Mahesh and Swapna, were killed, Reddy said. However, the top rebel leader in the state Sambasivdu managed to escape. Many people in the region go by just one name.
Six of the dead were women, Reddy said. There were no reports of police casualties.
The rebels, who claim to be inspired by Chinese revolutionary Mao Zedong, have been fighting for more than two decades, demanding land and jobs for agricultural laborers and the poor. More than 6,000 people have been killed in the conflict, the AP reports.
The rebels have often targeted police and government officials whom they accuse of colluding with landlords and rich farmers to exploit the poor.