Bangladeshi elite police on Monday shot dead seven suspected Rohingya gangsters involved in drug and people smuggling, a spokesman for the force said.
Tensions are rising in south-east Bangladesh two and a half years after hundreds of thousands of Rohingya refugees fled a military offensive in Myanmar.
The latest gunfight came after a recent spike in human smuggling as gangs lure refugees onto rickety fishing boats for often dangerous sea journeys to Malaysia.
The Rapid Action Battalion (RAB) said it was involved in a three-hour shootout with members of a bandit group led by notorious Rohingya gang leader known as Zokir.
"So far we have recovered seven bodies with bullet wounds," RAB spokesman Abdullah Sheikh Sadi told AFP.
He added that it was unclear if Zokir was among the dead.
Last month a boat packed with at least 138 Rohingya -- mostly women and children -- sank en route to Malaysia. Some 44 passengers are missing presumed drowned.
Since last year, Bangladeshi authorities have picked up over 700 Rohingya from fishing trawlers or coastal villages as they waited to board boats.
Bangladesh and Myanmar have signed a repatriation deal but the refugees have so far refused to go home without guarantees for their safety.
Rights groups regularly accuse Bangladeshi security forces of staging encounters with criminals in what in effect are extrajudicial executions.