The deaths of the suspects, identified by the Israeli military as well-known Hamas militants, ended one of the largest manhunts conducted by the Israeli security forces.
Eyal Yifrah, 19, Gilad Shaar, 16, and Naftali Fraenkel, also 16 and who had dual Israeli-American citizenship, were abducted on 12 June while hitchhiking home in the West Bank and killed soon afterward.
Their deaths prompted an Israeli crackdown on the Islamic militant Hamas group and set off a chain of events that led to a 50-day war between Israel and Hamas in the Gaza Strip.
In an operation code-named Brother’s Keeper, Israel dispatched thousands of troops across the West Bank in search of the youngsters, closed roads in the Hebron area and arrested hundreds of Hamas operatives.
The search ended on 1 July, when the bodies were found under a pile of rocks in a field north of the West Bank city of Hebron.
Israeli forces have been pursuing the suspects, Amer Abu Aisheh and Marwan Qawasmeh, since the abductions, said Israeli Defence Force spokesman Lieutenant Colonel Peter Lerner.
Lt Col Lerner said there was a recent breakthrough in the search that led the Yamam, a special police counter-terrorism unit, to the hideout in Hebron about a week ago.
Early yesterday, special forces entered the ground floor of a two-story building and killed two Hamas operatives after coming under fire, Lt Col Lerner said.
He added the two men had been identified as suspects early in the search, their Hamas connections were well known, and Hamas has repeatedly tried to abduct Israeli civilians and soldiers.
Another three members of the Qawasmeh family were also arrested, he said.
“We were determined in bringing the ruthless murderers of Gilad, Eyal and Naftali to justice,” Lt Col Lerner said.
“Today’s successful mission brings the long-term search to an end, and the perpetrators of the crime no longer pose a threat to Israeli civilians.”
In Qatar, a spokesman for Hamas leader Khaled Mashaal praised the two militants on his Twitter account.
“The martyrdom of Marwan Qawasmeh and Amer Abu Aisheh came after a long life full of jihad sacrifice and giving,” he said. “This is the path of resistance, which we all are moving in.”
Hamas denied involvement for weeks after the teenagers were abducted. However, during the Israel-Hamas war, an exiled Hamas leader responsible for West Bank operations acknowledged his group had been responsible for the abduction and killings.
In the days leading up to the start of the Gaza war in early July, a Palestinian youth was also abducted and killed in east Jerusalem by Israeli extremists in an apparent revenge attack over the killings.
In other developments, yesterday morning the Israeli military shot down a Syrian fighter jet that infiltrated its airspace over the Golan Heights, heightening tensions.
The Israeli military said it “intercepted the aircraft in mid-flight, using the Patriot air defence system”.
The military would not say what type of aircraft it was and said the circumstances of the incident were “unclear”.
However, a defence official identified the aircraft as a two-seater Sukhoi Su-24 Russian fighter plane.
The crew managed to eject in time and landed in Syrian territory, the Israeli official said.
It was the first such incident since the war with Lebanon in 1982.
Israel has avoided taking sides in the three-year civil war in Syria, although the two are bitter enemies who have fought several wars.