Five suspected rebels and two civilians died in the clashes, the army says.
The BBC’s Mame Campbell Toure in Dakar says the recent upsurge in fighting has shocked people, as it follows a long period of calm.
The Casamance Movement of Democratic Forces (MFDC) has been fighting for the region’s independence since 1982.
A peace deal was signed with the largest rebel faction in 2004 and the level of violence had subsided.
Once home to a thriving tourist industry, Casamance is separated from the capital, Dakar, by The Gambia. It is home to numerous ethnic groups, including many Christians, while northern areas are dominated by three, largely Muslim communities.