Panic gripped Rangamati's Naniarchar after a gunfight took place in the area on Tuesday evening.
Additional members of police and army have been deployed there, said Md Sabbir Rahman, officer-in-charge of Naniarchar police station.
In a press release, the Inter-Services Public Relations (ISPR) said two members of the United People's Democratic Front (UPDF-Prasit Khisa) were killed and a member of Bangladesh Army was injured in the gunfight.
The deceased were identified as Ashapurna Chakma alias Rocket and Shambu Chakma, said police.
The OC said Ashapurna was a member of the UPDF, but they were yet to know whether Shambu was involved in any politics. "We are trying to find out whether Shambu was a member of the UPDF or just a local fisherman," he said.
"We handed over Shambu's body to his family after autopsy, but no one came to take the other body," he added.
Pragoti Chakma, chairman of Naniarchar upazila, said, "Panic and tension gripped the locals after the gunfight on Tuesday."
Meanwhile, in a statement, UPDF claimed that Ashapurna Chakma was one of its members while Shambu was a fisherman, who had no links with the party.
The injured army soldier is Shahabuddin, member of a patrol team, who was shot in his left shoulder. He was taken by helicopter to Chattogram Combined Military Hospital (CMH) for treatment, the ISPR said in the release issued after the gunfight.
The incident took place around 5:30pm in Burighat area of the upazila when a patrol team of Rangamati Army Zone went to the spot to nab some armed extortionists of UPDF (Prasit Khisa) based on a tip-off, the release read.
Sensing the presence of the army, the UPDF men fired at them, prompting them to retaliate, triggering the gunfight, the release added.