Al Qaeda fighters captured the capital of a province in southern Yemen, killing about 20 soldiers, before they were driven out by the army late on Friday, local officials and residents said.
The fighting came hours after suicide bombers killed 137 people in the national capital Sanaa, in coordinated attacks claimed by Islamic State, an offshoot of al Qaeda that controls swathes of Syria and Iraq.
Clashes also took place in the country's north on Friday between local tribes and the Houthi militia, which controls Sanaa, illustrating the wide-ranging nature of Yemen's security crisis.
Yemen has been hurtling towards civil war since last year when the Houthis - who belong to a sect derived from Shi'ite Islam - advanced from their northern heartland, further undermining the country's tenuous internal security and creating more space in which Sunni group al Qaeda can operate.
Western countries and Yemen's Gulf neighbors see Al Qaeda in the Arabian Peninsula (AQAP) as the most dangerous al Qaeda branch after its efforts to bomb international airliners and launch cross-border raids into top oil exporter Saudi Arabia. Washington has been waging a drone air war against the militants.
AQAP fighters captured al-Houta, capital of the southern Lahj Province, on Friday but were forced to withdraw after holding it for several hours, the officials and residents said. Two army brigades then entered the city.
There were no reports of any militant casualties.
Houta is only 30 km (20 miles) from the Indian Ocean port of Aden, where President Abd-Rabbu Mansour Hadi has temporarily based the government since he escaped from weeks of house arrest in Sanaa by Houthi militia.
In the past two days, unidentified warplanes have bombed the palace in Aden that Hadi has been using.
The clashes in the north on Friday took place on the borders of Marib and al-Baydha provinces, a government official said, but there were no immediate reports of casualties.
Meanwhile in Taiz, a mainly Sunni city in southern Yemen, Houthi forces on Saturday fired on hundreds of people protesting against their advance across the country, but there were no immediate reports of casualties.
The Interior Ministry, which is dominated by Houthis, denied it had sent security forces to Taiz to help quell unrest.
Some political analysts say the Houthi advance could drive Yemeni Sunnis to align with al Qaeda and Islamic State.