The gun battle began when police surrounded a group of gunmen in an apartment building in the capital, Makhachkala.
Shoot-outs between police and suspected rebels have become more frequent in Daghestan in recent months, fuelling fears of a spillover of violence from neighboring Chechnya.
(compiled from agency reports)
Crisis In Chechnya
RFE/RL's complete coverage of Russia's war-torn Republic of Chechnya.