"Police shot dead an alleged Tibetan independence "insurgent" in northwest China," state press said on Wednesday, the first official admission that authorities killed anyone during recent unrest.
A policeman was also killed in the gun battle on Monday in a Tibetan populated area of Qinghai province, Xinhua news agency reported.
Tibet's government-in-exile says that more than 200 people have been killed in a huge Chinese military and police crackdown on protests against China's rule of the Himalayan region that began on March 10.
Until Wednesday's report, Chinese authorities had insisted they had killed no-one in the crackdown and blamed Tibetan "rioters" for the deaths of 20 people.
Monday's incident occurred after police went in pursuit of the leader of a handful of "insurgents seeking Tibetan independence", Xinhua reported, citing the Qinghai public security department.
The group had tried to incite Tibetan herders in Dari County to protest on March 21, a week after major protests erupted in Tibet's capital, Lhasa, according to Xinhua.
"After a month-long investigation, the police moved on Monday to arrest the suspected leader. The suspect resisted arrest and gunfire broke out," Xinhua reported, citing the department.
"The officer was killed in the gun battle, and other officers returned fire, killing the suspect."
Xinhua identified the police officer as Lama Cedain, but did not release the name of the alleged "insurgent" who was killed.