The heavy fighting in Sulu province's Patikul township wounded 10 rebels and 15 soldiers, including two army captains, military spokesman Lt Col Harold Cabunoc said.
Sporadic fighting continued hours after the first close-quarter firefight in the morning, and rebels were seen carrying away at least six dead, he added.
The Abu Sayyaf, a loose grouping of about 400 mostly poor rural fighters, has turned to kidnappings for ransom, extortion and other crimes to survive years of battle setbacks dealt by US military-backed Philippine offensives.
It was not immediately clear why there was a large concentration of Abu Sayyaf members under commander Radulan Sahiron and sub-leaders Hairula Asbang and Hatib Sawadjaan in Patikul's Gata village, but Cabunoc said the group may have included relatives of militants.
He said the rebels, numbering 250 to 300, "could be planning a huge-scale attack or they are attending a gathering, like (a) wedding."
The military launched the operation after receiving a report that a large group of Abu Sayyaf men were roaming the area, described as Sahiron's traditional territory.

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