Pakistani security forces raided a house in the South Waziristan tribal region, where al-Qaida-linked militants had been holding two Chinese engineers hostage since Saturday.
Officials say one of the hostages was rescued, but the other died of gunshot wounds. All five kidnappers were killed during the operation.
Officials say troops moved in after shots were fired from inside the house.
Earlier, negotiators tried but failed to secure the release of the hostages, who were abducted by fighters loyal to militant leader Abdullah Mehsud - a former detainee at a U.S. prison in Guantanamo Bay, Cuba.
The militant leader insisted that the kidnappers and the captives be allowed safe passage to join him at a nearby hideout.
The two Chinese engineers were working on a dam project.
Information for this report is provided by AP, AFP and Reuters.