Ten other people were injured in the attack Tuesday evening in Pishan county, according to an announcement issued by the government of the nearby city of Hotan.
Police sped to the scene within a minute of the attack, which remains under investigation, the announcement said, calling the attackers "rioters."
The far-western region is the homeland of the Uighurs - a traditionally Muslim group, many of whom complain of cultural and religious repression and discrimination - and is often hit by deadly unrest.
Beijing often accuses what it calls exiled Uighur separatist groups such as the East Turkestan Islamic Movement of orchestrating attacks in the vast, resource-rich region.
But overseas experts have voiced doubts about the strength of the groups and their links to global terrorism, with some saying China exaggerates the threat to justify tough security measures.
Dilxat Raxit, spokesman for the exiled World Uyghur Congress, said police arrested six people after the attack, including two young Uighurs who shared information about the incident over mobile phones.
"Armed forces in the county are targeting Uighurs for investigation and demanding that Chinese people avoid leaving their homes," he said, citing his sources in Xinjiang.
"I am worried the case will provide China with a new political excuse for repression and will cause more people to face discriminatory inspections or detentions."
Last month police killed three "rioters" after a manhunt for suspected members of a "violent terror group" linked to a 2015 attack in Pishan county.