The official Xinhua news agency added that police had arrested 215 "terrorists" while 13 civilians had also been injured in Monday's attack on a police station and government offices.
The attack occurred in Shache county, or Yarkand in the Uighur language, and was the latest in a series of violent incidents to have affected the vast region in recent months.
News of the clash first emerged late on Tuesday when Xinhua reported that dozens of people had been killed and injured by a knife-wielding gang.
A spokesman for the exile group World Uyghur Congress later said nearly 100 people had been killed or wounded.
Information in Xinjiang, in China's far west, is often difficult to verify independently.
The region is home to the mostly Muslim Uighur minority, and Beijing has blamed a series of recent terror attacks on violent separatists from the vast, resource-rich area.
Such attacks have grown in scale and sophistication over the last year and have spread outside the restive region.
Among the most shocking was a May market attack in Xinjiang's capital Urumqi in which 39 people were killed, and a deadly rampage by knife-wielding assailants at a train station at Kunming in China's southwest in March, which left 29 dead.
The violence has also included a fiery vehicle crash at Tiananmen Square, Beijing's symbolic heart, in October.
Yesterday, police in Xinjiang shot dead nine suspected terrorists and captured one, according to Xinhua.