Turkey has demanded the immediate release of 11 of its soldiers it says have been detained by the US military in northern Iraq.
"It's a totally ugly incident, it's something that shouldn't have happened," said Prime Minister Recep Tayyip Erdogan.
Turkish Foreign Minister Abdullah Gul has contacted US Secretary of State Colin Powell over the issue, the prime minister said.
Reports in the Turkish newspaper Hurriyet suggested the special forces troops were detained in the city of Sulaymaniyah on Friday on suspicion of planning an attack on a regional governor.
Around 100 American soldiers are said to have stormed the barracks being used by the Turkish troops, arresting 11 soldiers and six civilians and taking them to the regional capital of Kirkuk.
In response, Turkey on Saturday closed Habur border gate, the only crossing point for aid and goods between Turkey and Iraq.
The private Turkish NTV television station said Turkish military officials had discussed other possible retaliatory measures, including closing its airspace to US military flights, stopping the use of the southern Incirlik air base and sending more troops into northern Iraq.
American officials in Ankara said they had no details of the incident, while the Pentagon and State Department were unable to comment, Reuters reports.
"We cannot understand the Americans' aims," Hurriyet quoted deputy armed forces chief Yasar Buyukanit as saying. "This action by our ally of 50 years has deeply saddened and shaken us."
Turkey keeps a wary eye on developments across its border
For decades, Washington regarded Ankara as a firm friend, but the war in Iraq created unprecedented tension between them.
Relations soured when Turkey refused to allow US forces to be stationed on its territory in the run-up to the conflict in Iraq.
The BBC's Ankara correspondent, Jonny Dymond, says northern Iraq is still perceived by Turkey as part of its sphere of influence.
Ankara has long feared the creation of an independent Kurdish state in northern Iraq which could encourage separatist aspirations among its own Kurdish population.
Since the end of the war, most Iraqi Kurdish leaders have stuck to the line that they are seeking autonomy rather than outright independence.
But several thousand Turkish troops have remained within northern Iraq, ostensibly to keep track of the movements of Turkish Kurdish guerrillas who waged a separatist campaign in the 1980s and 1990s.
But the Turkish presence is resented by the Kurds who run the area.