Seven civilians and three militants have been killed in fighting in the volatile North Sinai region, an Egyptian security source told Aswat Masriya.
A mortar shell on Tuesday struck a house in the village of Negah Shabana south of the town of Rafah, killing seven civilians, all from one Bedouin family.
The source said that the rockets were aimed at a nearby security checkpoint but missed their target.
The source added three children were among the dead and a woman was injured by shrapnel.
Shortly after the rocket attack, Apache helicopters shelled a house where the reported jihadists were hiding, killing three, the source said.
However, a different security source told AFP that it was not immediately clear if the missiles were fired by army helicopters attacking militants or mortars fired by militants.
The Sinai Peninsula has been for a decade a haven for an Islamist insurgency which intensified following the 2013 ouster of president Mohamed Morsi.
The military has mounted an extensive campaign in the region to crush militant violence which has killed hundreds of police and troops over the past 16 months. Security forces have announced that they killed hundreds of militants. The violence has also led to civilian casualties.
Earlier in November, Ansar Bayt Al-Maqdis, Egypt's deadliest militant group, swore allegiance to jihadist Islamic State which has seized large territories of Syria and Iraq in recent months.
In October, Egypt began demolishing houses and clearing residents along its border with Gaza to set up a buffer zone aimed at deterring militant infiltration and arms smuggling.
The government's move came on the back of a deadly attack by militants that killed 30 soldiers on 24 October, in the worst such assaults on security forces in years.