The Yemeni Defense Ministry said military troops and armed civilians killed 28 al-Qaida-linked militants in battles on Friday in the southern part of the country.
The fighting is the latest in a series of bloody confrontations between government forces and militants in southern Yemen where militants control a patchwork of towns taken mostly last year during the country's political turmoil.
The ministry said in a statement that hours of fierce battles drove al-Qaida militants from a town called Zara in Abyan province. Two senior al-Qaida members were also arrested, the ministry said.
The ministry claims that nearly 200 militants have been killed in ongoing fighting this week in Abyan including Friday's violence.
The Yemeni army has often been outmaneuvered by the al-Qaida linked militants, forcing local residents to take up arms to defend themselves.
Al-Qaida's branch in Yemen, known as al-Qaida in the Arabian Peninsula, is one of the movement's most dangerous offshoots.
In the city of Lawder, also in Abyan, armed residents drove al-Qaida out in July but the militants have since been trying to regain their foothold in the town, which has a population of about 30,000.
Al-Qaida has become the de facto government in the towns they control, and in some places appear to be implementing a harsh version of Islamic law.
The terror group has long had a presence in Yemen, but is trying to take advantage of the chaos over the last year in Yemen to improve its position. Former president Ali Abdullah Saleh stepped down in February after a year of anti-government protests weakened his grip on power.
Saleh was Washington's longtime partner in the fight against the terror network's branch in this impoverished Arab nation. But he was frequently found to be unreliable, turning a blind eye to the growing strength of militant groups as part of an elaborate balancing act to maintain his grip on the fractured nation located in the southern part of the Arabian Peninsula.
The new Yemeni president has vowed to combat the extremist groups by restructuring the Yemeni army and purging it of Saleh loyalists.