Afghan and American troops, backed by warplanes, killed up to 50 militants in a day-long battle near the Pakistani border.
The US military said it was one of the bloodiest clashes since American forces entered Afghanistan.
One Afghan soldier was also killed and three others wounded in the fighting which raged all day Monday in Khost province, a former al-Qaida stronghold south of the capital, Kabul.
“Allied forces staved off rockets, mortars, rocket propelled grenades and machine-gun fire throughout the day and into the night,” said a statement said.
“The exact number of enemy casualties is unknown, but pilots flying overhead estimated that approximately 40-50 insurgents were killed.”