Twenty-one separatist fighters and six al-Qaida members were killed on Tuesday, media outlets cited government and security sources as saying.
The AFP news agency said that the al-Qaida in the Arabian Peninsula (AQAP) group attacked positions held by the Security Belt group.
The dpa news agency also gave the death toll of 27, citing security sources.
The UAE-trained Security Group is the military wing of the Southern Transitional Council (SCT), which calls for the secession of Southern Yemen from the rest of the country. Southern Yemen joined the rest of Yemen in 1990.
The SCT recently announced that it intends to rid the southwestern province of Abjan of what it calls terrorist groups. In the south of the country, al-Qaida militants have repeatedly attacked Yemen's armed and security forces.
Yemen has been embroiled in an ongoing civil war since 2014, when Houthi militants took over the capital city Sana'a. Southern Yemeni separatists have fought against the Iranian-backed Houthi fighters throughout the conflict.
The Security Group and SCT are supported by the United Arab Emirates. Saudi Arabia is trying to mediate between the southern Yemeni separatists and the internationally-recognized government based in Aden in order to unite them against the Houthi insurgency.
sdi/msh (AFP, dpa)