The captain died Wednesday during the operation to capture "a group of terrorists" in the wooded region of Tissemsilt, a ministry statement said.
Four jihadists were arrested, the statement added.
Algerian authorities use the term "terrorist" to describe armed Islamists who have been active in the country since the early 1990s.
Between 1992 and 2002, a civil war pitting the army against multiple Islamist and jihadist groups killed an estimated 200,000 people.
A 2005 Charter for Peace and Reconciliation was supposed to have turned the page on the conflict, but jihadist groups continue to carry out sporadic attacks.
In January, the defence ministry announced that 39 "terrorists" had been "eliminated" during targeted army operations in 2022.
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