Chechen President Ramzan Kadyrov says security forces have killed up to 20 Islamic rebels.
In a statement posted on the Chechen government website, Kadyrov said he believed one of those killed in Friday's battle may have been Doku Umarov, who has declared himself the head of a North Caucasus "emirate."
Kadyrov said helicopter gunships opened fire on the rebels before special forces launched a ground operation in Shalazh, 30 kilometers southwest of Grozny.
There has been no independent confirmation of the government's account of the battle.
Attacks in Russia's southern republics have risen in recent months.
Local leaders blame clan feuds, poverty, Islamism and heavy-handed tactics by law enforcement authorities for the upsurge.
In his state of the nation address on Thursday, Russian President Dmitry Medvedev said violence in the North Caucasus region, which includes Chechnya, Dagestan and Ingushetia, was Russia's biggest domestic problem.
compiled from agency reports