Thirteen Turkish soldiers and seven Kurdish rebels were killed in southeast Turkey in the deadliest ambush on troops in the rebel region for three years, security sources said.
The attack near the town of Silvan, in Diyarbakir province, also left seven soldiers wounded, two of them seriously, according to provincial governor Mustafa Toprak.
The incident took place during an army operation in the mountainous region known to be a stronghold of the outlawed Kurdistan Workers' Party (PKK), and the gunfire continued into the evening, according to the local sources who described the action as a rebel ambush.
The army brought in reinforcements with the help of helicopters and the fierce clashes started a fire in a nearby forest, the sources said.
The United States denounced the attack, which took place as Secretary of State Hillary Clinton was en route to Turkey.
"The United States condemns in the strongest terms" the killings of Turkish soldiers, State Department spokesman Mark Toner told reporters in Washington.
After arriving late Thursday Clinton said she was "deeply saddened" by the deaths of the Turkish soldiers.
"We stand with Turkey in its fight against the PKK, a designated terrorist organisation which has claimed tens of thousands of Turkish lives," she said in a statement.
"We support Turkey in its fight against terror and we will continue to work with the government of Turkey to combat terrorism in all its forms. I will be meeting with Turkey's leaders over the next two days in Istanbul where I will personally convey to them our commitment to close cooperation."
According to the Anatolia new agency, Prime Minister Recep Tayyip Erdogan cancelled his engagements in Istanbul to convene an emergency meeting with the country's top security chiefs, including army commanders and interior minister Besir Atalay.
After that meeting, which lasted 45 minutes, Erdogan issued a statement stressing Ankara's determination to subdue the militant rebels.
"The objective of the forces behind this attack are clear. (But) Turkey has the forces and the determination to overcome the terrorism issue," he said.
In parliament, assembly president Cemil Cicek reacted angrily to the latest rebel action, calling on Kurdish leaders to choose their path.
"On the one side there is democracy, peace and freedom, but on the other blood, hate and barbarism," he said in comments run by the Anatolia news agency.
Selahattin Demirtas, head of the biggest pro-Kurdish party in Turkey, the BDP, offered his condolences for the dead while denouncing the lack of political will to resolve the Kurdish question.
The 36 Kurdish deputies elected to the 550-seat Turkish parliament in last month's polls have refused to take the oath in protest against the detention of fellow Kurds accused of links to the PKK and the invalidation of the election of one deputy due to his prison sentence for "terrorist propaganda".
The attack was the deadliest on the Turkish army since October 2008 when 17 troops were killed in a rebel raid on an army base near the Iraqi border.
Last week a Turkish soldier was killed and three were wounded in clashes with the PKK in the eastern Pulumur area.
The PKK, listed as a terrorist group by Turkey and much of the international community, took up arms in 1984, sparking a conflict that has claimed some 45,000 lives.
In February, the rebels threatened to end a unilateral truce, declared in August last year, while saying they would defend themselves "more effectively" against military operations.
Western Iran, which has a sizeable Kurdish minority, has also seen deadly clashes in recent years between security forces and rebel groups operating from bases in neighbouring Iraq and Turkey.