The bodies of Nurul Islam Marzan and another man said to have been behind the murder of a Japanese national in 2015 were found after officers raided a property in the capital's Rayer Bazar neighbourhood,police said.
"Marzan and his associate Saddam (Hossain) died in an encounter withpolice," Inspector General of Police A.K.M Shahidul Haque told AFP.
"He (Marzan) was the operational commander of the July cafe attack. He was one of the masterminds of it."
Additional deputy commissioner Yusuf Ali told AFP police had found the body of another "suspected extremist" alongside Marzan.
Ali said that Marzan was "one of the masterminds" of the siege at the upmarket Holey Artisan Bakery on July 1 last year in which 18 foreign hostages were shot or hacked to death.
The country's security forces launched a deadly crackdown against Islamist extremists following the attack, which badly undermined Bangladesh's reputation as a relatively moderate Muslim nation.
Since the siege, security forces have killed around 50 Islamist extremists, including most of the alleged leaders of a homegrown outfit known as Jamayetul Mujahideen Bangladesh (JMB).
The Islamic State (IS) organisation claimed responsibility for the cafeattack, posting images of the carnage as it happened and photos of the gunmen who had posed with the group's black flag.
But Mohibul Islam Khan, the deputy chief of Dhaka police's counter-terrorism and transnational crime unit, said Marzan was known to be a member of JMB, joining the group after dropping out of Bangladesh's Chittagong University.
"Along with Tamim (Ahmed Chowdhury), Marzan planned the Gulshan attack," he said, referring to the Canadian citizen of Bangladeshi descent who police described as the main mastermind of the siege.
Chowdhury was killed in another raid outside the capital in August last year. Later police also arrested Marzan's wife in a raid in the capital and last month she gave birth to a daughter in custody.
Police intelligence had found that Marzan organised the cafe siege and was its operational commander, said Khan.
