Mortar shells hit the base in Ato, sparking a gun battle between Al Shabab militants and Ethiopian forces.
Al Shabab militants have attacked a military base on the Somalia-Ethiopia border, triggering fierce fighting that caused an unknown number of casualties, security officials said.
Friday's strike was the latest in the area by the Somalia-based militant group in a matter of weeks, raising concerns about the stability of the border region.
Mortar shells hit the base in Ato, sparking a gun battle that involved the Ethiopian military and Liyu special police from the country's Somali region, the sources said.
"We are getting information that armed confrontation broke out between Al Shabab and the Liyu police this morning around Ato," Mohamud Adan, a local security official in the nearby town of El-Berde, told AFP news agency by phone.
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"The terrorists fired rounds of mortar shells before the direct confrontation started," he added.
"The forces have managed to repel the desperate terrorist attackers and there are some casualties even though we don't have the details."
Madker Mursal, a security commander in the Ato area, said the militants used mortar and artillery fire in the attack that lasted almost two hours, and that Ethiopian forces responded, with backup from combat helicopters.
The Al Qaeda-linked Al Shabab claimed the attack in a brief statement, saying it had overrun the base and killed over 100 Ethiopian police.
Last weekend, the authorities in Somalia said they had killed more than 100 Al Shabab militants who had made a cross-border incursion.
In a separate incident in southern Somalia on Friday, a local government official and his son were killed in a roadside bomb blast, police said.
The justice minister for South West state, Sheikh Hassan Ibrahim, was leaving a mosque after Friday prayers "when the explosion ripped through his car", local police officer Hussein Yerow said.
Al Shabab has waged a bloody insurrection against Somalia's fragile federal government for 15 years and remains a potent force despite an African Union operation against the group.
Its militants have been ousted from Somalia's main urban areas, including the capital Mogadishu in 2011, but continue to wage attacks on military, government and civilian targets.