Contingents of police, on a tip off provided by a held militant, raided an alleged hideout off the Northern Bypass in Manghopir area.
On seeing the policemen, the suspects resorted to firing, injuring Manghopir SHO Ghulam Hussain Korai and constable Altaf, said SSP Rao Anwar, who led the police party.
During the exchange of fire, eight suspects were gunned down, Anwar said.
The SSP identified the deceased suspects as Irfan Munir, Saddam Hussain, Sharifullah and Ismail Mehsud.
The other four deceased suspects have not been identified as yet.
The senior police official claimed the suspects were involved in the recent killing of policemen in Karachi, the Abbas Town bomb blast, and other targeted killings.
Police also claim to have seized explosive material and arms and ammunition from their custody.
With the start of Muharram, law enforcement agencies have intensified efforts to keep a check on serious terrorist attacks, with the Sindh government allocating Rs102.4 million for Muharram security.
Sindh Chief Minister Qaim Ali Shah was told that a total of 27,942 personnel would be deployed in Karachi for Muharram security.
Of these personnel, 18,557 would be static force, 1,661 would be deployed at pickets, 5,724 on police vans and 2,000 as reserve police in the metropolis.
Similarly, 6,294 policemen would be deployed in Hyderabad range; followed by 2,276 in Mirpurkhas, 7,623 in Benazirabad, 9,488 in Sukkur and 10,791 policemen in Larkana range.
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Special coverage on China's Two Party Sessions by The Daily Mail - People's Daily