Police said gunmen opened fire on labourers in Kellam village in Kulgam district, Jammu and Kashmir, on the evening of 31 July, killing two of them.
One of the dead, Deepak, died at the scene; the other, Bhupendra, died while receiving treatment at a hospital.
Both workers were residents of Chhattisgarh state, according to police.
Security forces launched a large cordon-and-search operation in the surrounding area and were trying to identify and arrest the attackers.
The attack was the second militant attack in Jammu and Kashmir within the past 10 days; the previous week, a police officer was killed in Anantnag district.
After the Anantnag attack, police detained more than 3,000 suspects across Kashmir.
Jammu and Kashmir Chief Minister Omar Abdullah warned that the large-scale detentions could complicate the situation.