Egyptian security forces fired tear gas and exchanged gunfire with armed groups in Giza's Kerdasa district (15km from Cairo) early on Thursday, state TV reported.
A security source told Ahram Online that 51 people had been arrested during the raid and police were combing the area for around 100 other suspects.
Three of those arrested allegedly played a prominent role in an assault on Kerdasa police station which killed 11 officers.
Dozens of "gunmen and terrorists" had been apprehended, Cairo investigation chief Mohamed El-Sharkawy said earlier in the day.
TV footage showed dense smoke clouds hovering above the area, one of the oldest in Giza and once a destination for visitors seeking traditional textiles. Armoured vehicles and security troops poured into the area and helicopters flew overhead in a bid to flush out alleged "terrorist elements."
A senior police officer, Giza security assistant director Nabil Farag, was shot dead during the raid and ten other officers were injured, state TV reported.
The Ministry of Interior said dozens of weapons including three RPG's had been seized.
Police took control of the area and imposed a daytime curfew.
Interior ministry spokesperson General Hani Abdel-Latif said army forces surrounded the district, while police special forces entered and made arrests.
"We will not stop until we've purged Kerdasa of terrorists and criminals," he explained. "Police are continuing their advance through the district."
Security troops stormed the area to arrest people accused of torching police stations and killing 11 security officers following the violent dispersal of pro-Morsi sit-ins in Cairo and Giza on 14 August.
Kerdasa police station was abandoned after it was hit with rocket propelled grenades and gunfire.
The operation in Kerdasa came after Monday's raid on Dalja in Upper Egypt's Minya province, which was partially controlled by Morsi supporters. Islamist hardliners had launched an "intimidation campaign" in which at least two churches and tens of Christian-owned homes were burnt down and two Copts killed. Security forces arrested 56 suspects.
"Dalja and Kerdasa are among the most prominent negative [consequences] of the Brotherhood regime," Abdel-Latif added.
Egypt's army has also been battling a militant insurgency in the Sinai Peninsula, adjoining Israel and the Palestinian Gaza Strip, which has spiked since the army overthrew Islamist president Mohamed Morsi on 3 July amid mass nationwide protests against his rule.
Militant violence, including bomb attacks and drive-by shootings, has spilled over into other parts of the country. Two military personnel were shot dead in the Nile Delta's Sharqiya governorate on Tuesday.
The deposed president has been held incommunicado since his ouster. The top echelons of his Muslim Brotherhood, along with hundreds of other Islamists, have been rounded up in a broad clampdown.
In Cairo, metro services were briefly halted on Thursday morning after two hoax bombs were found on the tracks near Helmeyet Al-Zaytoun station in south Cairo.