Militants on Thursday night gunned down five Hindu villagers in the Rajouri district of Jammu region.
Police said three other villagers had been critically wounded in the shootout at village Mithani, 150 kms from winter capital Jammu.
They said a group of militants barged into a labour shed in Mithani village and sprayed bullets at the eight local labourers who were sleeping inside.
"Five villagers died on the spot and three others were critically wounded in the indiscriminate firing by the militants," Dr S P Vaid, inspector general of police Jammu range told this correspondent.
He said the injured have been taken to hospital for treatment. Security forces have reached the village and a manhunt has been launched to track down those involved in the killing of the villagers.
Thursday night massacre has come at a time when the ruling Peoples Democratic Party is demanding withdrawal of security forces from the urban areas of the state and repeal of the Armed Forces Special Powers Act.
The demand has led to hardening of postures between the PDP and Congress with the chief minister, Ghulam Nabi Azad maintaining that security of the state should not be converted into a political slogan.