The offensive in the Khyber tribal region marks the first major military action which Pakistan's newly elected government has taken against the Taliban on its territory.
Pakistani forces reportedly bombarded suspected militant hideouts with mortar shells in the mountains in Khyber.
Pakistani journalist Syllab Massud, speaking to RFE/RL's Radio Free Afghanistan from Peshawar, said the situation is "tense."
"[People] are really worried about their future because nobody knows what will happen next," Massud said.
Security officials were quoted as saying an around-the-clock curfew has been imposed in the Bara area near Peshawar, close to the Afghan border. Meanwhile, troops were deployed, blocking the main road into Khyber.
No casualties have been reported, but local newspapers report hospitals in Peshawar have been put on alert.
Prime Minister Yousuf Raza Gilani, who came to power following February general elections, is in Peshawar. He said his government, which has engaged in a cease-fire and negotiated peace deals with Pakistani Taliban leaders, would not allow the tribal areas to descend into chaos.
'We Will Use Force'
"We are ready to negotiate with those who are ready to put down their weapons," he said. "We are supporting a peace deal with those who want security in the region. We don't oppose any peace negotiation with those people. We will use force against those who are causing insecurity."
The crackdown follows increased activity of Taliban fighters in Khyber and in the sprawling city of Peshawar over the past year. Armed militants have threatened owners of music and video shops to close down, and ordered barbers to stop shaving men's beards.
The Khyber Pass provides the main road link to neighboring Afghanistan.
Kabul and NATO complain about an increase in crossborder attacks following the Pakistani peace deals. Afghan officials also accuse Pakistan of secretly supporting the insurgents and harboring their leaders -- a charge Pakistan's civilian and military leaders deny.
'Clearly A Concern'
On June 27, U.S. Defence Secretary Robert Gates criticized Pakistan for failing to put pressure on Taliban forces along the border, saying it had fuelled a rise in violence.
"The ability of the Taliban and other insurgents to cross [the Afghanistan-Pakistan] border and not being under any pressure from the Pakistani side of the border is clearly a concern," Gates said. "I think that's the area that needs to be addressed with the Pakistani government."
Speaking at a news conference in Washington, Gates said efforts by the Pakistani government to negotiate a peace agreement with tribal leaders had taken the pressure off insurgent groups.
Reacting to the latest government military offensive, Pakistani Taliban leader Baitullah Mahsud said he was suspending peace talks with Islamabad and threatened retaliation across Pakistan unless military offensives against his group stopped.
RFE/RL's Radio Free Afghanistan contributed to this report