Five Sudanese counterterrorism officers were killed Tuesday during a raid in Khartoum targeting "a cell linked to the Islamic State group", the country's intelligence services said in a statement.
"After receiving information on the presence of a terrorist cell linked to IS, intelligence officers conducted a search," it said.
"Eleven terrorists from different foreign countries have been arrested," the statement added.
A two-storey house in the capital's Jabra neighbourhood was surrounded by a cordon of security forces, who asked crowds to move away in case explosives were left behind, an AFP reporter said.
Neighbours told AFP they heard an exchange of gunfire and saw the wounded being transported away in cars.
Prime Minister Abdalla Hamdok offered his condolences over the death of the five "heroes" killed confronting a "cell linked to" the Islamic State group, and wished the wounded a speedy recovery.
IS propaganda outlets made no immediate mention of the incident in Khartoum.
"Despite the absence of high-profile terrorist attacks, ISIS facilitation networks appear to be active within Sudan," it said, using another name for the group in its 2019 country report on terrorism.
Sudanese officials had "acknowledged that there were 'extremists' linked to ISIS in the country", the report added.
To north of Sudan lies Egypt, which for years has been battling an insurgency in the Sinai Peninsula led mainly by the local branch of the Islamic State group.
Another group of the extremist fighters is active in Yemen, across the Red Sea from Sudan.
To the north and west, IS groups operate across the vast, porous and ungoverned desert borders with both Libya and Chad, including fighters from the Islamic State in the Greater Sahara (ISGS).
The clash comes after Sudan's government said last week it thwarted a coup attempt involving military officers and civilians linked to the regime of ousted strongman Omar al-Bashir.
Under Bashir's Islamist regime, Sudan hosted international terrorist groups.
Between 1992 and 1996, Bashir led Sudan towards a more radical brand of Islam, hosting Al-Qaeda founder Osama bin Laden and sending jihadist volunteers to fight in the country's civil war with the south Sudanese.
Bin Laden was expelled under US pressure after Washington placed Sudan on its list of "state sponsors of terrorism".
The US removed Sudan from its blacklist last December, after Khartoum pledged to normalise ties with Israel.
Khartoum is facing numerous challenges as it tries to bolster its transition to civilian rule after Bashir's ouster, with deep fragmentation among political factions as well as dire economic woes.
Protests this month blocked two key oil pipelines in Port Sudan, the country's main seaport on the Red Sea, over a peace deal with rebel groups.