France says its troops are providing logistical, medical and intelligence support to Djibouti in the country's confrontation with Eritrea.
But a French officer said his soldiers had not participated in this week's border clashes, which Djibouti's leader has described as a war.
The UN Security Council has condemned Eritrea's action, which has left nine Djiboutian troops dead and 60 injured.
Both France and the US have military bases in the former French colony.
Meanwhile, Eritrea has reacted angrily to earlier US criticism, accusing the US of inflaming regional conflicts.
After weeks of tension, fighting broke out on Tuesday in the Mount Gabla area, also known as Ras Doumeira, near the Red Sea's shipping lanes.
Djibouti said its forces were forced to fight back after coming under fire from Eritrean troops demanding the return of deserters who had fled to Djibouti.
"Since the beginning of hostilities, French soldiers stationed in Djibouti have been providing assistance in logistics, medical but also support in terms of intelligence service to the Djibouti army," French officer Col Ducret told Djibouti's state-owned news agency ADI.
The UN Security Council has called for a ceasefire and urged both parties to engage in diplomacy to resolve the matter.
The Arab League also called on Eritrea to withdraw its forces from the border area, Reuters news agency reports ADI.
"If Eritrea wants war, it will get it," said Djibouti's President Ismail Omar Guelleh, after visiting injured troops.
Asked whether the two countries were at war, he replied: "Absolutely".
But Eritrea has reacted angrily to US state department condemnation of what it termed Eritrea's "military aggression".
"It is unfortunate that the US administration is currently embroiled in instigating, compounding and inflaming regional conflicts," Eritrea's foreign ministry said in a statement.
Since Eritrea gained independence in 1993, the Horn of Africa country has been involved in two serious conflicts over territory with its neighbours.
Last month, Djibouti complained to the UN that Eritrea was fortifying its side of the border.
At the time, Eritrea denied it was planning for war.