Seventeen soldiers and 36 civilian volunteers for the army died on Monday while repelling an "attack," the army general staff said in a statement.
The unit had been deployed in the town of Koumbri in Yatenga province to help the resettlement of residents forced out of the area by jihadists more than two years ago, it said.
About 30 members of the security forces were injured, the army added.
It said that several attackers had been "neutralised" in a counter-operation and their combat equipment destroyed.
Operations are still under way in the area, it said.
Burkina Faso saw two military coups last year, triggered -- as in neighbouring Mali and Niger -- by anger at failures to stem a jihadist insurgency that has claimed thousands of lives.
Regional group the Economic Community of West African States (ECOWAS) condemned the attack.
In a statement the West African bloc said it had learned "with shock" about the death of the soldiers and civilian volunteers, condemning the "terrorist attacks" expressing its "solidarity with the Burkinabe people".
Burkina Faso was suspended from ECOWAS after the military seized power.
- Millions displaced -
Since 2015, more than 16,000 civilians, troops and police have died in jihadist attacks in Burkina Faso, according to a count by an NGO monitor called the Armed Conflict Location & Event Data Project (ACLED).
More than 5,000 have died since the start of this year.
More than two million people have also been displaced within Burkina Faso, making it one of the worst internal displacement crises in Africa.
On June 26, three attacks killed 31 soldiers and 40 auxiliaries in Centre-North province.
In August, two attacks in Centre-East province killed five police and around 20 others.
The authorities, for their part, say more than 65 jihadists were "neutralised" between August 7 and September 1.
The country's strongman is Captain Ibrahim Traore, who took power in September 2022 at the age of just 34, making him the world's youngest leader outside of royalty.
He has promised a return to democracy with presidential elections by July 2024.
Relations between the junta and France broke down after the takeover, prompting French forces that had been helping the under-equipped Burkinabe army to quit the country in January.
Traore last week held talks with a Russian delegation on development and military cooperation.
On Monday, his foreign minister, Olivia Rouamba, held talks in Tehran with President Ebrahim Raissi in which she said she hoped for "stronger bilateral cooperation" with Iran.
Many of the casualties among the security sources are Volunteers for the Defence of the Fatherland (VDP) -- civilians who are given two weeks' military training and work alongside the army, typically carrying out surveillance, information-gathering or escort duties.
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