Officials at two hospitals in the eastern city, the birthplace of the NATO-backed uprising that toppled dictator Moamer Kadhafi in 2011, said at least 11 soldiers and five civilians were killed, and 26 people wounded.
An air force commander said the clashes erupted when three Islamist groups, including Ansar al-Sharia, attacked a base of elite forces who support the renegade general, Khalifa Haftar.
Images posted on the Internet showed army assault helicopters firing missiles at suspected Islamist targets.
It triggered panic in Benghazi, Libya's second city where hospitals appealed to people to donate blood and doctors called on the combatants to spare the lives of civilians.
"Benghazi is suffering, people are fed up, spare them," the head of the Benghazi Medical Centre, Doctor Leila Buigiguis, said in remarks broadcast on television.
The education ministry closed schools, forcing the postponement of scheduled final exams.
Residents cowered indoors and many shops and businesses were closed as gunfire rang out and explosions shook Benghazi, witnesses said.
Haftar spokesman Mohamed al-Hijazi called on residents in combat zones across Benghazi to evacuate, in an apparent warning that the fighting could escalate.
Colonel Saad al-Werfelli, who commands the Benghazi air force base, said the jihadists "bombarded base 21 early today, killing and wounding soldiers (from the elite unit) who were trapped inside".
The air force retaliated by launching strikes on the assailants, added Werfelli, who along with the elite forces backs Haftar's campaign against Islamists accused of repeated violence in Benghazi.
Al-Qaeda in the Islamic Maghreb has urged Libyans to fight Haftar and his so-called National Army, labelling the ex-army general an "enemy of Islam".
Authorities have denounced Haftar as an outlaw, but after thousands of Libya rallied for his support he said he has a mandate from the people to pursue his offensive to crush "terrorism".
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