Lebanese and Israeli troops exchanged fire across the Lebanese border late on Wednesday for the first time since the end of the war last year, causing no injuries.
The incident was sparked by Israeli sappers moving in to clear unexploded ordnance just across the border, both sides said.
They withdrew early on Thursday after completing their mission, the Israeli army said.
"The Lebanese army first fired warning shots. We asked them through UNIFIL (the United Nations force in Lebanon) to stop shooting. Shots were fired in the direction of our forces," an Israeli army spokesman told said.
"We retaliated in the direction of the shots. Our forces had no injuries."
"The firing has now finished and we consider the incident closed," he added.
A Lebanese security source confirmed that the Lebanese army had fired on Israeli troops close to the border.
"The Lebanese army fired on an Israeli bulldozer that was trying to advance towards the central sector of southern Lebanon" near the village of Yaroun, the source said, without giving further details.
Israeli aircraft overflew the eastern sector of the border where the incident took place, public television reported. The area was lit up intermittently by flares.
The shooting was the first armed incident at the Israeli-Lebanese border since Israeli troops withdrew from Lebanon in October, after fighting a devastating 34-day war against Shiite militant group Hezbollah last summer.
A UNIFIL spokesman described a shooting incident as serious and said UN soldiers had been deployed to the area.
"In a serious incident last night, the Lebanese army and IDF (Israeli Defence Force) exchanged fire across the Blue line in the area of Maroun ar Ras," said spokesman Milos Strugar.
"The exchange was initiated by the Lebanese army after an IDF bulldozer crossed the technical fence in an apparent attempt to clear the area between the technical fence and the Blue line of mines.
He said UNIFIL commander Major General Claudio Graziano had urged both sides to cease hostilities, which they did.
"UNIFIL troops have been deployed in the area," he said.
Security sources earlier Wednesday said Lebanese troops were on high alert after Israeli sappers moved to clear unexploded ordnance just across the border.
Two Israeli demining vehicles accompanied by Merkava tanks were seen approaching the border near Yaroun, south of the town of Bint Jbeil, prompting the Lebanese army to deploy troop reinforcements, the sources said.
An Israeli military spokesman said the sappers were clearing a zone in which four unexploded bombs had been found on the Israeli side on Monday.
Israeli officials charged that the bombs had been recently planted by Hezbollah.
"An engineering unit is carrying out clearing work in this sector in Israeli territory, south of the blue line, where four explosive charges were found on Monday," an Israeli army spokesman said.
"This work will in the future prevent the terrorist organization Hezbollah from concealing other charges in this sector," he said.
Lieutenant-Colonel Gai Hazut, responsible for operations in the northern Galilee division, said: "These charges were freshly laid under cover of mist and rain in the past days."
And Lt-Col Eiran Pawker, commander of the sappers who found the charges, accused Hezbollah of having laid them.
He said on Monday: "We can conclude that Hezbollah has not ended its hostile operations against our territory."
But Hezbollah insisted Tuesday that the charges dated from before the conflict, which ended with a UN-brokered ceasefire in August.
A beefed-up UN peacekeeping force is patrolling the volatile border area along with Lebanese soldiers under the terms of the truce.