Mr Jaitley, who also holds the finance portfolio, arrived in Srinagar on Wednesday evening and soon after chaired the security review meeting which was also attended by newly-appointed Defence Secretary Sanjay Mitra and Army chief General Bipin Rawat, officials said.
The Defence Minister was briefed on the prevailing situation in Jammu and Kashmir and steps being taken to restore normalcy in the Valley through close coordination amongst all the government agencies, the officials said.
He was also apprised about various measures to strengthen the counter-infiltration grid along the Line of Control (LoC), where Pakistani forces have been indulging in shelling and attacks.
Mr Jaitley "lauded the valour, sacrifice and patriotic fervour of every soldier who is serving in these challenging situations for national integrity", saying the entire country is proud of them, the officials said.
He urged all soldiers to continue the good job being done and ensure safety of the innocent people while dealing firmly with the inimical elements.
He also impressed upon the commanders to maintain strict vigil along the LoC and remain prepared to give a befitting reply to any misadventure from across.
Mr Jaitley will preside over the GST Council meeting in Srinagar on Thursday.
He is also likely to meet Chief Minister Mehbooba Mufti.
The visit of Mr Jaitley and Mr Rawat to Kashmir comes against the backdrop of beheading of two Indian security personnel by Pakistani military in Poonch district earlier this month.
Mr Jaitley said the sacrifice of the two soldiers will not go in vain and that the armed forces will react "appropriately".
The Kashmir valley has witnessed a spurt in incidents of violence and terror attacks in the last couple of months.