Puntland, a semi-autonomous province, is allied to the fractious transitional federal government that is struggling to impose central rule over the Horn of Africa nation.
"Somaliland troops have captured the entire village and 100 Puntland troops. Somaliland has warned that if Puntland troops try to come back, they would not mind going deep into Puntland territory," a security official who tracks Somalia said.
The latest battle between the rival regions further complicates the fortunes of President Abdullahi Yusuf, who was president of his native Puntland before his election to national office in late 2004.
Puntland and Somaliland for years have fought over their border, which was made when Britain took Somaliland as its colony and Italy the rest of what is now modern-day Somalia.
There were conflicting reports on whether Somaliland troops had advanced further into Puntland toward its capital Garowe, about 90km to the east.
Abdillahi Ali, Somaliland's defence minister, told reporters that Somaliland troops had control of the checkpoint on the road to Garowe. A diplomat that tracks Somalia from Nairobi told Reuters Somaliland had advanced 25km east of Las Anod.
Puntland officials had no comment except to say Adde Muse, Puntland's president, was flying back to Garowe from Djibouti.
Puntland's military strength has waned since Yusuf took many of its militias for security since returning to Somalia in 2005.
Somaliland's leaders detest Yusuf, a former warlord who invaded their capital Hargeisa in the late 1990s, and have refused to join his government.
Somaliland argues it should be given its own sovereignty since it has held democratic elections and done what most of the rest of Somalia has not since 1991 -- provide stability and relative security.