At least four people are dead after Kosovan police cleared a monastery held by at least 30 heavily armed men near the border with Serbia.
"We put this territory under control. It was done after several consecutive battles," Xhelal Svecla, Kosovo's minister of internal affairs said.
His statement follows a chaotic day that began when a police officer died in an ambush near Banjska village.
Gunmen then entered a monastery and traded gunfire with police for hours.
Prime Minister Albin Kurti had said at least 30 heavily armed men were surrounded in the complex in Leposavic, and called for their surrender.
He blamed "Serbia-sponsored criminals". Serbia has not commented.
At least three of the gunmen were killed in battles through the day as police mounted what Mr Svecla described as a "clearance operation".
Mr Svecla said police made several arrests during the operation and seized a large amount of weapons and equipment.
However it remained unclear if all gunmen had been apprehended during the sweep.
The attack and ensuing firefight marks one of the gravest escalations in Kosovo for years, and follows months of mounting tension between Pristina and Belgrade.
The Nato-led peacekeeping force in Kosovo said its troops were ready to respond if required.
Sunday's shooting began at about 03:00 (01:00 GMT), after police said they arrived in Banjska where a blockade had been reported.
Officers were attacked from several positions with "an arsenal of firearms, including hand grenades and shoulder-fired missiles", they said in a statement.
"We can see armed people in uniforms... they are firing on us and we are firing back," Kosovo police official Veton Elshan told AFP.
Mr Kurti said they were "professionals, with military and police background".
The Serbia Orthodox Church said that gunmen had stormed a monastery in Leposavic, where pilgrims from the northern Serbian city of Novi Sad were staying.
Priests and pilgrims locked themselves inside the monastery's temple for safety, the Diocese of Raska-Prizren said.
"Armed masked men move around the courtyard and occasional gunshots are heard," it said in a statement condemning the violence.
Tensions have run high in Kosovo, after violent clashes followed a disputed local election in May and EU-mediated political talks designed to stabilise the situation have stalled.
Kosovo declared independence in 2008 but Serbia - along with Belgrade's key allies China and Russia - does not recognise it.
Many Serbs consider it the birthplace of their nation. But of the 1.8 million people living in Kosovo, 92% are ethnic Albanians and only 6% are ethnic Serbs.
The EU's foreign policy chief Josep Borrell condemned what he called the "hideous attack" and said those responsible must be brought to justice.
But Kosovo's foreign minister, Donika Gervalla-Schwarz, criticised Mr Borrell's statement, saying it did not express support for the police nor use the word "terrorists" to describe the attackers.
It comes after the latest EU-mediated talks collapsed last week, with Mr Borrell blaming Mr Kurti for failing to set up the association of Serb-majority municipalities which would give them more autonomy.
Unrest engulfed northern Kosovo in May after Kosovo Albanian mayors were installed in majority-Serb areas, after Serb residents boycotted local polls.
Nato deployed an additional 700 troops to Kosovo to deal with unrest in the northern town Zvecan following the elections.
Some 30 Nato peacekeepers and more than 50 Serb protesters were hurt in the ensuing clashes.