The Revolutionary Armed Forces of Colombia, which has a policy of killing hostages if troops approach their camps, shot three of the captives in the head and the fourth in the back, President Juan Manuel Santos said.
The bodies were found in chains, he said.
"These heroes of Colombia sacrificed their lives trying to bring peace to Colombia," Santos said. "This is another demonstration of the FARC's cruelty ... It's an atrocious crime."
One police sergeant who was also being held hostage by the FARC managed to escape and was found alive by the military on Saturday, Defense Minister Juan Carlos Pinzon said.
Latin America's No. 4 oil producer has been wracked by bloodshed from guerrillas and cocaine barons for decades, although the FARC - once a powerful force controlling large parts of Colombia - has been severely weakened.
Santos said on Thursday the Andean nation was nearing the final phase of nearly 50 years of war and that his government would be willing to talk peace if the guerrillas were serious.
Troops launched the operation in southern Caqueta province 45 days ago after a tip that FARC captives were being held in the area, Pinzon told a news conference. The killings of the four hostages happened after a firefight between soldiers and the rebels.
"This is a reality shock," said security analyst Alfredo Rangel. "It shows that despite all the hits they have received in recent years that they are determined to fight the state, they are determined to continue their violent ways."
Bombings and kidnappings have eased sharply as Colombian troops use better intelligence, U.S. training and technology to take the fight to the rebels.
Foreign investment, especially in oil and mining, has surged as the insurgency weakens. But the FARC and other groups pose a threat in rural areas where the state's presence is weak and cocaine trafficking lets the rebels finance operations.
The FARC, considered a terrorist group by European nations and the United States, has lost key commanders in the past four years, including its founder Manuel Marulanda, military leader Mono Jojoy last year and Cano earlier this month.
The new leader Timoleon Jimenez - or "Timochenko" - has vowed to continue the fight against the government.
"What a great Christmas the FARC guerrillas have given the families of the police and military," said Marleny Orjuela, director of Asfamipaz, an association that represents families of kidnapped members of the armed forces.
"Santos has killed our hope, rescuing them when he knows they would be executed."
The FARC, which funds operations with extortion as well as drug trafficking, has held scores of politicians, police officers and soldiers as hostages, including French-Colombian Ingrid Betancourt seized in 2002 and three Americans taken a year later.
They were rescued by the military in 2008, when Santos was defense minister.
This was the third group of hostages killed by the FARC.
In 2003, Guillermo Gaviria, governor of Antioquia province, was shot along with an adviser and eight military captives when troops attempted to free them. In 2007, 11 lawmakers were shot when the rebels falsely believed troops entered their camp.