At least 12 Al-Qaeda fighters and two policemen were killed late Saturday in fighting on the ground and coalition air strikes on second city Aden, security sources said.
Fighter jets and Apache helicopters from the Saudi-led coalition carried out four air strikes in support of the security forces, they said.
Clashes in the port city's Mansura residential district continued late Saturday after breaking out in the late afternoon after security forces set up new checkpoints, they added.
Dozens of gunmen in balaclavas carrying the Al-Qaeda flag deployed to push back police trying to enter the neighbourhood, witnesses said.
The police said in a statement that fighting against the "armed terrorist gangs in Mansura will continue to ensure the safety of residents" in the internationally recognised government's temporary capital.
The air strikes - which started after jihadists shot at an Apache helicopter - hit a municipal office and a jihadist arms depot, witnesses said.
Al-Qaeda and the Islamic State group have taken advantage of the conflict between the Huthi insurgents and pro-government forces to reinforce their presence in the south, including in Aden.
Meanwhile, pro-government forces on Saturday pressed their offensive aimed at breaking the rebels' months-long siege of the southwestern city of Taez, military sources said.
Fighting raged north and east of the city, they said, a day after loyalists pushed the Iran-backed Huthis out of its western and southern suburbs.
Forces loyal to President Abedrabbo Mansour Hadi managed to "retake important positions" in a northern suburb where heavy clashes continued, one source said.
But retaking the eastern part will be more difficult, the source said, as this is held by the Republican Guard, an elite army unit loyal to former president and Huthi ally Ali Abdullah Saleh.
The rebels and their allies have been attacking residential neighbourhoods of Taez from this area, which includes an airport, an industrial zone and the headquarters of the special forces, the source added, without giving a death toll.
Loyalists on Saturday morning pushed back rebels trying to retake the headquarters of the army's 35th brigade in the western suburbs, sources said.
Loyalists last summer retook five southern provinces including Aden and have for months been fighting to win back Taez.
Breaking the siege should allow for humanitarian and medical aid to reach about 200,000 besieged residents, Taez governor Ali al-Maamari said on Friday from exile in Saudi Arabia.
The capital Sanaa further north has been under rebel control since September 2014.
US Secretary of State John Kerry on Saturday said that he and Saudi Foreign Minister Adel al-Jubeir had agreed to work towards a ceasefire in Yemen.
"We discussed Yemen, where we have agreed to work even more closely together in the next days to explore the possibilities of a political solution and we both agreed that it would be desirable to see if we can find a similar process that we did in Syria in Yemen to try to get a ceasefire," Kerry said.
The United Nations has been pursuing efforts for peace talks, but UN envoy for Yemen Ismail Ould Cheikh Ahmed said last month that "deep divisions" were preventing progress.
Saudi Arabia's ambassador to the United Nations, Abdallah al-Mouallimi, said this week that he hoped talks could resume by March 15.
More than 6,100 people have died - half of them civilians - since the coalition launched air strikes against the rebels and their allies in March 2015, according to the UN.