The aircraft, identified as an Advanced Light Helicopter (ALH), came down in mountainous Bandipore district, some 65 kilometres north of the Kashmiri summer capital Srinagar, killing a lieutenant colonel and a major, the Press Trust of India news agency said.
The chopper crashed about 30 minutes after it took off for a night training sortie from the army’s aviation base at Manasbal.
There was no immediate reason given for the accident.
Rebel groups have been fighting Indian forces since 1989 for independence or to merge the territory with Pakistan.
The nuclear-armed neighbours have fought two of their three wars over the scenic region, while years of fighting have left tens of thousands dead, most of them civilians.