Aljazeera said clashes were still going on as insurgents hurled grenades at police from their hideout in al-Ras in the al-Qassim region, 350km northwest of the Saudi capital Riyadh.
Witnesses said gunfire could still be heard on Monday morning in the neighbourhood of al-Ras which security forces had surrounded since early Sunday. Officials described the insurgents as "terrorists".
Aljazeera has learned that at least one Saudi police officer was shot dead on Sunday and another 15 had been wounded by midday.
Other sources said a total of 35 security personnel had been wounded.
On Sunday, Saudi Arabia's al-Ekhbariya television broadcast comments from Prince Faisal bin Bandar bin Abd al-Aziz, amir of the al-Qassim region, confirming that three suspected fighters had been shot and killed.
"They were asked to surrender, but those people are known not to listen," Faisal told the television station. He described the armed men as "terrorists" but did not say which organisation they belonged to.
The firefight erupted about 8am (0500 GMT) in the city of al-Ras after security forces surrounded several wanted men in a neighbourhood called al-Jawazat, a security source in Riyadh said.
The gun battles began early on Sunday morning and dragged on into the night, Reuters quoted a security source as saying.
Several security vehicles were damaged.
Another security source earlier said the clash erupted as security forces raided a house where "suspected members of the deviant group [official terminology for suspected al-Qaida sympathisers] were believed to be hiding".
Witnesses said they saw at least three people being carried away from the house on Sunday morning, but it was not clear whether they were wounded or dead.
Speaking to Aljazeera by phone from the scene in al-Qassim, a Saudi witness Sulayman al-Siwayan said there was heavy security presence in the al-Ras neighbourhood. The place was swarming with special forces, police and civil defence personnel.
"One or two helicopters can be seen hovering over the area and explosions and sporadic shootout can be heard from time to time," he said.
Roads leading to the area have been closed and the neighbourhood isolated, al-Siwayan said.
The security forces have done an excellent job controlling the situation without allowing many casualties, he said.
A medical source at a local hospital told Aljazeera that 51 security forces personnel had arrived for treatment, but al-Siwayan said the number was an exaggeration. He put the number of security casualties at around 15.