Security sources on Friday said authorities were following a lead to a militant camp in the desert where eight suspected members of Hasm Movement were believed to be hiding.
The interior ministry said security forces hunting down militants in the region were attacked late Friday on a road to the Bahariya oasis, some 200 kilometers (125 miles) southwest of Cairo, AFP reported.
State television said Saturday a security alert was declared in the area to hunt down militants.
At least 50 police officers have been killed in a shootout with militants in Egypt when they launched a raid in the Western Desert.
Local media and unnamed security sources had put the death toll of security forces at around 60.
The suspected militants tried to flee after the exchange of fire there, the sources said, and continued to fire at a second security unit called in for backup from atop neighboring buildings.
The country has been in a heightened state of turmoil and violence since the military overthrew President Mohammed Morsi of the Muslim Brotherhood, the country's first democratically-elected president, in mid-2013 following mass protests against his rule. The group has claimed attacks around Cairo targeting judges and police.
The statement said that the forces were looking for terrorists in the surrounding areas.
No militant group immediately claimed involvement in Friday's shootout.
Hundreds of soldiers and police have been killed in the grinding IS insurgency in the Sinai Peninsula in the far northeast of the country.
The Egyptian president also affirmed that the sacrifices of those policemen, who were killed in the attack, will not go in vain.