Russian security forces have stormed an apartment building in Nalchik, in the southern Kabardino-Balkaria republic.
The security forces had been besieging a group of suspected Islamic militants hiding in the block since Saturday.
An unknown number of the alleged militants were killed when a firefight broke out and the security forces set off poison gas.
This is the latest in a series of confrontations with alleged extremists in the republic close to Chechnya.
On Saturday, police arrested three other suspected militants in Nalchik.
Last month, security forces killed seven people they said were linked to Chechen rebel leader Shamil Basayev during a two-day battle in the same city.
In the last few years, Islamist militants have conducted numerous attacks in the North Caucasus, the most notorious being the seizure of a school in the town of Beslan, North Ossetia.
The three-day siege of the school, where the attackers held more than 1,000 hostages, ended in a bloodbath, with 330 people dead and hundreds wounded.