Government forces recaptured the city of Azan in the southern Shabwa province on Monday, shortly after being overrun by separatists, reports Anadolu Agency.
The city was taken over earlier Monday by fighters aligned with the Southern Transitional Council (STC) before forces dispatched by the government recaptured it amid clashes, local sources said.
Casualties were reported among STC forces, which are backed by the United Arab Emirates (UAE).
Tensions have escalated between the Yemeni government and TSC in recent days after separatists wrestled control of large portions of the southern city of Aden, the current seat of the government.
Yemen has remained wracked by violence since 2014, when Iran-backed Houthi rebels overran much of the country, including capital Sanaa.
The conflict escalated the following year when Saudi Arabia and its Sunni-Arab allies launched a massive air campaign aimed at rolling back Houthi gains in Yemen and supporting the country's pro-Saudi government.