About 300 Turkish troops have crossed into northern Iraq in a raid against Kurdish rebels, Iraqi officials say.
Turkish troops have been amassed on the Iraqi border
The lightly-armed soldiers moved up to three kilometres (1.9 miles) inside Iraq, an Iraqi Kurdish official said.
It is believed to be the first major Turkish troop deployment in Iraq since the cabinet backed the move last month to hunt PKK rebels based there.
Separately, Turkish police have held the leader of Turkey's main Kurdish party for using false documents.
Nurettin Demirtas, the head of the Democratic Society Party (DTP), was detained on Monday evening at Ankara's airport on his return from Germany.
He is accused of submitting a fake health report to avoid military service, his party said.
The DTP has 20 members of parliament and seeks autonomy for mainly Kurdish south-eastern Turkey. It denies any links to the rebels from the Kurdistan Workers' Party (PKK).
A spokesman for the Iraqi Kurdish peshmerga security forces told the BBC that the Turkish troops entered Iraq overnight in an area called Seeda Kan - in the triangle between Iraq, Iran and Turkey
He said it was a mountainous area with very difficult terrain.
Iraqi forces also reported hearing small arms fire from the area.
A senior Iraqi military source told Reuters that the operation appeared to be limited and was unlikely to expand.
The Turkish army accuses PKK rebels of using bases inside Iraq to launch attacks on Turkey.
The Iraqi Kurdish regional authorities condemned the incursion.
"Turkey wants to transfer the problem onto the territory of Iraqi Kurdistan," said Fouad Hussein, a senior official in the office of Kurdish regional President Massoud Barzani said.
Unnamed Turkish officials later confirmed the raid.
Turkish President Abdullah Gul was quoted by Turkish media as saying the army was doing "what is necessary". He declined to give any further details.
Weekend air raids
The troops move came after Turkish warplanes bombed suspected PKK bases in northern Iraq over the weekend.
MOUNTING BORDER TENSION
7 Oct PKK rebels kill 13 Turkish troops near Iraqi border
17 Oct - Turkish MPs allow military operations in Iraq
21 Oct - 12 Turkish troops die in PKK ambush near Iraqi border
30 Nov - Turkish cabinet backs PKK pursuits in Iraq
13 Nov - Turkey shells PKK targets in Iraq, Baghdad says
1 Dec - Turkish army targets rebels in Iraq, inflicting "heavy losses"
16 Dec - Turkish jets bomb PKK targets in Iraq for the first time
Iraqi officials have said bombs hit 10 villages, killing one woman, while the PKK has reported seven deaths.
In October, Turkey's parliament voted to allow the military to launch operations into Iraq to combat the PKK, which had stepped up attacks in Turkey.
Ankara has massed up to 100,000 troops near the mountainous border with northern Iraq, backed by tanks, artillery and warplanes.
But Iraq and the US have urged Turkey not to carry out its threat.
As many as 3,000 PKK members are believed to be based inside northern Iraq. Turkey has accused the local Kurdish authorities of supporting them.