Seven militants were killed and 15 Egyptian military personnel were killed or wounded in a clash in North Sinai on Saturday, the Egyptian military said.
The breakdown of military casualties was not immediately clear. However, two security sources told Reuters that some of the injuries were serious.
Security forces launched a campaign a year ago against Islamist militants focused on Egypt's Sinai peninsula, and say they have killed several hundred militants since then.
"Combing operations and the pursuit and elimination of the terrorist elements in the area where the incident took place is ongoing," the military spokesman said in a statement.
The security sources said operations were taking place under aerial cover.
Since 2013, Egyptian security forces have battled extremist militants, who have repeatedly targeted security checkpoints and Egypt's Christian minority.
Seven militants killed in Egypt’s North Sinai