Insurgents attacked US bases and government offices in Ramadi, in central Iraq, and then dispersed throughout the city, reports say.
Ramadi had been taken over by insurgents in the past
Heavily-armed insurgents fired mortars and rockets at the buildings and then occupied several main streets, residents told news agencies.
Ramadi has been a rebel stronghold for many months.
But the US military played down the scale of the attack, saying it had resulted in no damage or casualties.
US Marines spokesman Captain Jeffrey Pool told the AFP news agency the militants had simply fired a rocket propelled grenade at a joint US-Iraqi observation post at 0930 (0630 GMT).
"As of 1400 (1100 GMT), there were no signs of any significant insurgent activity anywhere in the city."
Captain Pool accused the militants of exaggerating the scale of the attack.
"This is clearly a sign of how desperate insurgents have become," he said.
Residents told the Reuters news agency earlier that hundreds of heavily armed men in masks had for a time patrolled the main streets of the city and set up checkpoints.
Leaflets distributed by the men declared that al-Qaeda in Iraq, the group run by Abu Musab al-Zarqawi, was now in control of the city.
"Its followers will burn the Americans and will drive them back to their homes by force. Iraq will be a graveyard for the Americans and its allies," one leaflet declared.
Residents said there was no noticeable presence of US or Iraqi forces in the city after the attacks.
The attack came as 2000 US Marines and 500 Iraqi soldiers launched an offensive against insurgents in Hit, east of the River Euphrates, not far from Ramadi.
The US military said the town was "suspected to be an al-Qaeda in Iraq safe area and base of operations for the manufacture of vehicle car bombs."