The Egyptian Health Ministry says at least 40 people have been shot dead in Cairo outside the military barracks where supporters of ousted Egyptian President Mohammed Morsi believe he's being held. At least 300 have been wounded.
The Muslim Brotherhood has called for Egyptians to rise up against those who want to steal their revolution.
The Brotherhood says its members were fired on while they were holding a sit-in at a Presidential Guard barrack but the army says a "terrorist group" tried to storm the barracks, the BBC reports.
Mr Morsi, an Islamist and Egypt's first freely elected president, was ousted by the army last week after mass protests. Dozens of people have been killed since unrest began last weekend.
Mr Morsi is believed to be held at the Presidential Guard Club, in the eastern Nasr City district of the capital.
His supporters - many of them members of the Muslim Brotherhood movement he comes from - have been staging a sit-in there demanding his reinstatement.
The Muslim Brotherhood says the army raided its sit-in about 4am as protesters were performing dawn prayers.
"The protesters were taken unawares and the troops used live ammunition, bird shot and tear gas," protester Alaa el-Hadidi told the BBC.
After Monday's violence, the hardline Salafist Nour party - which had supported Mr Morsi's removal - said it was withdrawing from talks to choose an interim prime minister, describing the shooting as a "massacre".
The Freedom and Justice Party, the Brotherhood's political wing - which took nearly half the seats in last year's historic election - called on Egyptians to stage an "uprising" in response to the incident, against "those trying to steal their revolution with tanks".
Speaking earlier, an Egyptian presidential spokesperson said there was cross-party support for the Social Democratic lawyer Ziaad Bahaa el-Din to be appointed interim prime minister, Reuters reports.
He says there was also backing for the liberal politician Mohamed ElBaradei as a possible interim deputy president.