The incident took place on Monday afternoon in the Buddhal area of Rajouri district, 170 km (110 miles) north-west of Jammu.
"He went berserk and fired indiscriminately in the camp, killing his two colleagues before shooting himself dead, Lieutenant Colonel R.K. Chibber, defence spokesman told Reuters.
"We have ordered a court of inquiry into the incident."
On Saturday, another Indian soldier went on the rampage, killing three colleagues and injuring two others at an army camp in the Nairla area, also in Rajouri district. The soldier was also seriously injured after he tried to shoot himself.
Stress levels are high amongst soldiers posted in occupied Kashmir and reports of troops killing each other are a regular occurrence in the region.
The army has been trying to bring down stress levels by introducing yoga to soldiers who face extreme danger not only from violence but also tough terrain and extreme weather conditions.

Copyright Reuters, 2006