Clashes broke out as Iraqi forces moved to recapture Kurdish-held oil fields and a military base near the Iraqi city of Kirkuk, after demanding that they return to the positions they occupied before collapsing in the face of an Isis advance three years ago.
Iraqi forces said they were under instructions to avoid violence, but Kirkuk residents said that gunfire and explosions could be heard in the city in the early morning.
Kurdish media reported that Kurdish volunteer fighters rushed to take up arms, and Iraqi military vehicles had been set ablaze as both sides exchanged artillery fire.
Prime Minister Haider al-Abadi ordered his forces to "protect all citizens" as they retake positions, state television reported.
The confrontation puts US allies on both sides of the lines. The advancing force included Iraq's counterterrorism forces, who have trained closely with US forces. On the other side are Kurdish peshmerga forces, also trained and equipped by the US.