Thirteen Turkish soldiers are reported killed and seven wounded in clashes with Kurdish rebels from the outlawed PKK.
Local authorities say an ambush took place near the town of Silvan in Diyarbakir province.
The army had been conducting an operation in the area, according to local security sources. Fighting has been so fierce it reportedly started a forest fire.
The Turkish prime minister travelled to Ankara for an emergency meeting with defence chiefs.
The attack came hours after the government and a pro-Kurdish party failed to agree an end to a boycott of parliament by Kurdish MPs, who are protesting against court decisions that refused to release five newly-elected pro-Kurdish politicians from jail.
Tensions have been rising since the PKK ended a six-month ceasefire in February.