The Egyptian military said one of its navy vessels came under a "terrorist" attack in the Mediterranean on Wednesday, leaving eight servicemen missing at sea, according to AFP.
The military said in a statement that four boats used by the assailants were destroyed and 32 of the suspected militants were arrested.
The Egyptian government is fighting an Islamist militant insurgency that has killed scores of policemen and soldiers, but a maritime attack is unprecedented.
An earlier report on the official MENA news agency reported that a naval vessel had been set alight in an exchange of fire with assailants about 70 kilometers (45 miles) from Egypt's shore.
The military said it was a "terrorist" attack.
"Search and rescue operations have evacuated five wounded servicemen to a military hospital... and there are still eight personnel lost and the search continues," it said in the statement.
The military said it destroyed "four boats used by the armed assailants, including terrorists, and arrested 32 people".
Egypt has been experiencing an ongoing wave of terrorism attacks, dating back to 2011 when then President Hosni Mubarak was ousted.
However, most of the terrorism has taken place on land, with the majority of the attacks being in the restive Sinai Peninsula.
The majority of the attacks in Egypt have been claimed by the jihadist Ansar Bayt Al-Maqdis, which has killed hundreds of Egyptian soldiers and police over the last year.
Among the attacks claimed by the group since the ouster of Islamist president Mohammed Morsi was the assassination of a top Egyptian police general, who was gunned down as he left his home in a west Cairo neighborhood, and a bus bombing on a tour bus filled with South Korean tourists in the Sinai.