The neighboring former Soviet republics have long been at odds over the territory -- which is situated within the borders of Azerbaijan -- and fought a war over it that finished in 1994.
Despite the conflict ending with a Russian-brokered ceasefire, military skirmishes between the two sides are not uncommon.
While Armenia said it was responding to missile attacks launched by its neighbor Sunday, Azerbaijan blamed Armenia for the clashes.
In response to the alleged firing of projectiles by Azerbaijan, Armenian Prime Minister Nikol Pashinyan tweeted that his country had "shot down 2 helicopters & 3 UAVs, destroyed 3 tanks."
Arayik Harutyunyan, leader of the self-proclaimed Republic of Artsakh, a de facto independent Armenian state not recognized internationally which controls Nagorno-Karabakh, said the region had lost positions to Azerbaijan.
"We have lost some positions. Mostly in the direction of Talysh and in the southern parts," Harutyunyan said during a press conference Sunday.
As a result of the escalating tensions, the Armenian government has decided to impose martial law and to order "general mobilization," Pashinyan said in a later tweet.
Azerbaijan's parliament on Sunday voted to impose martial law, effective as of midnight (4 p.m. ET), and President Ilham Aliyev approved the decision.
Armenia earlier claimed that its neighbor had targeted civilians in peaceful areas, including in Stepanakert, the region's capital.
Artak Beglaryan, an Artsakh official Artsakh, said in a tweet that a mother and child had been killed.
Beglaryan also said dozens of people had been wounded and large infrastructural damage had been caused, adding: "Azerbaijan is intentionally targeting civilian objects."
However, Azerbaijan suggested Armenia was accountable for the latest flare-up between the two countries.
Hikmet Hajiyev, assistant of the President of the Republic of Azerbaijan and head of the Foreign Policy Affairs Department of the presidential administration, tweeted Sunday: "There are reports of dead and wounded among civilians and military servicemen. Extensive damage has been inflicted on many homes and civilian infrastructure."
Accusing Armenia of "an act of aggression and use of force," Hajiyev added that the "political-military leadership of Armenia bears full responsibility."
At least five people in one family were killed as a result of artillery shelling by Armenian armed forces on Sunday, according to Azerbaijan's state news agency APA, which cited the Azerbaijani prosecutor general's office.
So far, 19 civilians have been injured and hospitalized following the clashes, APA reported.
At least 14 civilians were injured in villages along the border due to artillery and tank fire from the breakaway Armenian enclave, according to state media Azertac. CNN has been unable to independently verify claims by either side.
"Currently, the Azerbaijan Army is taking retaliatory actions and our troops fully control the operational situation," Azerbaijan's Ministry of Defense said in a statement Sunday.
But Armenia's Ministry of Foreign Affairs said in a statement: "We strongly condemn the aggression of the military-political leadership of Azerbaijan."
"The military political leadership of Azerbaijan bears full responsibility for the consequences of their aggression," the statement added.
Fighting between the two sides has been increasing in recent months.
In 2016, dozens of soldiers from both countries died during clashes. Two years earlier, then-UN Secretary-General Ban Ki-moon urged Armenia and Azerbaijan to "commit themselves to immediate de-escalation and continuing dialogue" after reports of violence and casualties along the border.
The Nagorno-Karabakh region is internationally recognized as part of Azerbaijan but is governed by a majority group of ethnic Armenians.
Turkish President Recep Tayyip Erdogan voiced support for Azerbaijan on Sunday, claiming that Armenia is "the biggest threat to peace and security in the region."
"The Turkish nation continues to stand by its Azerbaijani brothers and sisters with all its means, as it has always done," Erdogan said on Twitter.
Meanwhile, Russian President Vladimir Putin discussed the escalation in a phone call with Armenian Prime Minister Pashinyan, according to statements from the Kremlin and from the Armenian Prime Minister's Office.
The Kremlin statement said Putin expressed concern at the clashes, saying, "It was noted that it is important now to take all necessary efforts to prevent a military escalation of the confrontation, and most importantly, to stop military operations."
The United States said it was "alarmed" by reports of military action between Armenia and Azerbaijan and urged both sides to cease hostilities immediately, according to a statement from US State Department Spokesperson Morgan Ortagus.
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