Some 30 people are reported to have been killed in weekend violence near Ethiopia's border with Sudan, though aid workers put the toll much higher.
An Ethiopian Defence Ministry spokeswoman said troops had gone to Gambella region to restore calm.
Fighting is said to have been sparked by a land dispute between ethnic communities living in the area.
Schools, shops and offices are closed and hospitals are overstretched as scores of wounded are brought in.
Domestic flights between the capital, Addis Ababa and Gambella have also been cancelled.
An eyewitness contacted by the BBC said Ethiopian highlanders, supported by the military, have attacked local people.
But army spokeswoman Major Harnet Yohannes said the soldiers were there only to keep the peace.
The UN refugee agency, UNHCR, estimates 30 people have died, including three refugee workers and two policemen.
AP news agency quoted humanitarian workers in Gambella as saying the death toll following the fighting could reach 100.
They say there were three attacks including two on UN trucks.