An Azeri serviceman was killed in an exchange of fire over the breakaway Karabakh region on Tuesday, Azerbaijani Defence Ministry said in a statement.
Karabakh, which lies inside Azerbaijan but is controlled by ethnic Armenians, has run its own affairs with heavy military and financial backing from Armenia since a separatist war which erupted in 1991 ended in three years later.
Despite years of negotiations under the Organization for Security and Cooperation in Europe (OSCE) Minsk Group - consisting of Russia, France and the US - little progress in resolving the dispute and violence has sporadically broken out since, with a similar incident taking place last month.
The conflict between the two countries started with Armenia's territorial claims against Azerbaijan in 1988 during the decline of the Soviet Union, in which both Azerbaijan and Armenia were constituent states.
Karabakh had held a referendum in December 1991 in order to create an independent state which meant a declaration of separation from the Republic of Azerbaijan. The referendum, which was boycotted by most of the local Azeris, was claimed to be accepted by the majority of the region.
However, it was stated that the referendum was illegal because according to the Soviet constitution, only its 15 republics could declare independence from the union and Nagorno-Karabakh was not a republic.
War quickly broke out and Armenian armed forces occupied 20 percent of Azerbaijan, including the Nagorno-Karabakh region and seven surrounding districts.
The most dramatic massacre in the conflict occurred in February 1992 when Armenian and some CIS (Commonwealth of Independent States) forces killed at least 161 ethnic Azeri civilians in the Khojaly Massacre.
Today the sides are separated by a demilitarised buffer zone, with both claiming frequent violations by the other.
Last month, 12 Azerbaijani troops and more than 100 Armenian soldiers were killed in fighting over the region between Azerbaijani troops and pro-Armenian forces.
The fighting was the worst incidents since a peace deal was struck in 1994 over the Azerbaijani enclave.
A Moscow-brokered ceasefire halted four days of violence in the South Caucasus region on April 5, but sporadic shooting is still frequent at night.