At least 10 Egyptian soldiers are reported killed and several more wounded in a car bomb attack near the North Sinai city of el-Arish.
Al-Masri al-Youm newspaper said a convoy of buses carrying infantry soldiers was hit by a roadside bomb as it moved through the Kharouba area.
The death toll was likely to rise, a security source said.
Attacks on security forces in the Sinai have increased since Islamist President Mohammed Morsi was ousted in July.
No group has admitted carrying out Wednesday's bombing, but the peninsula has grown increasingly unstable in recent years, triggered by the fall of President Hosni Mubarak.
His overthrow in February 2011 left the northern Sinai prone to groups of jihadists, some with links to the Gaza Strip.
In September security forces launched an offensive against Islamist militants in the Sinai, but have suffered a spate of deadly bombings.
Wednesday's attack, which took place at around 07:45 local time (05:45 GMT) on the road from Rafah to el-Arish, is thought to be the bloodiest against the military since Mr Morsi was deposed.
Thirty-five soldiers were wounded in the explosion which was said to have hit one of the two buses in the convoy.
The attack is reported to have targeted Egypt's Second Field Army, which has been deployed in Sinai and has been involved in an operation to destroy tunnels along Egypt's border with Gaza.
The soldiers were on their way back to Cairo on leave, reports said. Some of the most seriously wounded victims were being airlifted to hospital in the capital.
Communications with the area were cut as military helicopters circled over the area, searching for the attackers, BBC Cairo correspondent Orla Guerin reports.
Egyptian cabinet spokesman Salah al-Din told Al-Masri al-Youm that firm decisions would be taken in response to the bombing and all options were under consideration.
Egypt's military spokesman said the armed forces would continue to fight "black terrorism".
Meanwhile, a Sinai-based jihadist group linked to al-Qaeda has admitted killing a high-ranking member of Egypt's National Security Agency outside his home in eastern Cairo earlier this week.
Ansar Bayt al-Maqdis said it had shot dead Col Mohammed Mabruk, who had been due to testify against ex-President Morsi.
The colonel was believed to have helped uncover a network of Muslim Brotherhood members that had tried to help leaders of the movement flee the country after Mr Morsi was ousted. The former president is part of the Brotherhood.
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