Fighting started when police attempted to arrest Husain Badr al-Din al-Huthi - a Zaidi Shia leader who had cursed the US during a Friday sermon. The Zaidi are a sect of Shia Muslims.
Aljazeera's correspondent in north Yemen said al-Huthi's followers are surrounded in the town of Saada - 240km north of the capital, Sanaa.
At least four people have died and five more were wounded in the skirmish between police and al-Huthi's supporters, he added.
Yemeni authorities accuse the Zaidi Shia leader of heading a rebel group known as The Believing Youth that constantly preaches against US and Israeli policy in various mosques.
An impoverished country of 19 million located at the southern tip of the Arabian peninsula, Yemen is fighting to root out dissidents with possible connections to Saudi-born Usama bin Ladin's al-Qaida group.
Anti-US sentiment is high in the region following the occupation of Iraq and continued US support for Israel's occupation of Palestinian territories.