The assault took place early on Sunday in a village in Sindhuli district, 160 kilometres (100 miles) south-east of the capital, Kathmandu.
It was the first significant attack since a nine-month state of emergency was lifted 10 days ago, although there have been a number of explosions in Kathmandu.
"Forty-eight policemen were killed and 11 injured," said Junior Interior Minister Devendra Raj Kandel, adding that at least two officers were still missing.
The security forces found the bodies of two rebels at the scene and are now hunting for the other guerrillas.
Night raid
The rebels launched their assault in the middle of the night, a common tactic.
The first indication came when police officials said they had lost contact with the outpost at Bhimad, after what they described as a major attack.
They said around 1,000 rebels had taken part in the attack and had blocked approaches to the town, delaying the arrival of police reinforcements until the morning.
There were reportedly 70 police in the station at the time.
The survivors apparently fled into dense jungle surrounding the village.
More than 4,000 people have been killed in the six-year insurgency, which seeks to replace the monarchy with a Communist state.
The government has said that elections will be held in November.