Turkish troops backed by fighter jets and helicopter gunships are reported to have pursued Kurdish rebels into Iraq.
It follows overnight attacks on military installations in Hakkari province, near the Iraqi border, which killed at least 26 Turkish soldiers. The attacks are thought to have inflicted the biggest loss on Turkish forces since 1993 and President Abdullah Gul has vowed to avenge them.
In recent months, violence between the army and separatist rebels has mounted.
The attacks come a day after a blast in the south-east Bitlis province killed five police officers and three others; in mid-August nine troops were killed by rebels in Hakkari province.
Turkey has responded to this with a police crackdown on suspected rebel sympathisers and air strikes on Kurdish sites in northern Iraq. Scores of rebels have died.
Rebels are seeking greater autonomy in the country's Kurdish-dominated south-east, and have killed dozens of members of the country's security forces, and at least 17 civilians, since mid-July.
Tens of thousands of people have died in the conflict since 1984.
Quick response The latest violence - thought to be at least two simultaneous ambushes - took place in Cukurca and the district of Yuksekova overnight.The ministry of interior said 26 soldiers had died and 16 were injured.
A spokesman for the PKK rebel group, Dostdar Hamo, confirmed that clashes had been taking place in two areas since 03:00 (01:00 GMT), the Associated Press news agency reported.
"No-one should forget that those who make us suffer this pain will be made to suffer even stronger," President Gul told reporters. "They will see that the vengeance for these attacks will be great."
Within hours, security sources said Turkish planes were bombing Kurdish rebel bases in northern Iraq, while local news sources said soldiers had also entered the area. Fighter jets and gunships have been leaving the main air base in the south-east.
The prime minister and foreign minister have cancelled overseas trips in response to the bloodshed, while the interior and defence ministers rushed to the border area, reports said.
Security officials told Reuters news agency 15 militants had died in clashes near the Iraqi border.
This is the biggest attack in terms of soldiers' loss of life since 1993, says the BBC's Jonathan Head in Istanbul, and the public pressure to respond is intense.
Turkey's army is a conscript one and many families will have sent sons to serve.
The Turkish parliament has recently renewed the law that gives Turkish forces carte blanche to pursue rebels over the border, our correspondent says.
The question is how long it can retain the support of the Iraqi and regional Kurdish governments, particularly as civilians inside Iraq have been killed in some recent operations, he says.
The move also kills any chance of political moves towards reconciliation, he adds.
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