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Dozens of civilians and assailants were killed and injured in the attack by a gang armed with knives and axes, Chinese state media reported late Tuesday following a media blackout of the violence.
"Police officers at the scene shot dead dozens of members of the mob," the official news agency Xinhua said.
It did not give a precise breakdown of the casualties from the incident on Monday - the day before Muslims in China marked the Eid festival - and information in Xinjiang is often difficult to verify independently.
Xinjiang's government web portal Tianshan on Wednesday described the violence as a "terror attack" that killed or wounded "several tens" of Uyghur and Han.
The Han are China's largest ethnic group, whose members have migrated in large numbers to Xinjiang in recent decades.
Citing local Uyghur sources, Dilxat Raxit, a spokesman for the World Uyghur Congress, an exile group, said in an email: "Nearly 100 people were killed and wounded during the clash."
The violence came, he added, when "Uyghurs rose up to resist China's extreme ruling policy and were met with armed repression resulting in dead and injured on both sides".
Raxit had earlier said more than 20 Uyghurs were killed and 10 wounded, while a total of 13 armed Chinese personnel died or were injured and about 67 people were arrested.
The violence took place in Shache county, or Yarkand in the Uyghur language, near the edge of the Taklamakan desert in the west of the vast region.
According to Xinhua, it was "organized and premeditated".
The Global Times, which is close to the ruling Communist Party, cited unnamed sources as saying police had intensified security checks in the Kashgar area, which includes Yarkand, because of a trade fair, and clashed with "thugs" found in possession of explosive materials.
Some escaped and later "incited" others to attack the local government facilities and police station, the report said, adding they also hijacked a coach and held passengers hostage.
In a bylined commentary late Tuesday, Xinhua said the assailants were "committing blasphemy against Islam, 'the religion of peace'."
"Police shooting dead of the mobsters was decisive and well justified," it added.
Beijing commonly blames separatists from Xinjiang for carrying out terror attacks which have grown in scale over the past year and spread outside the restive and resource-rich region.
Among the most shocking incidents were a market attack in Xinjiang's capital Urumqi in May 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.
They came after a fiery vehicle crash at Tiananmen Square, Beijing's symbolic heart, in October last year.
Chinese President Xi Jinping, who visited Xinjiang in late April, ordered a crackdown after a stabbing spree and explosion at an Urumqi railway station left three people dead and 79 wounded on the last day of his trip.
During the visit he had called for a "strike first" strategy to fight terrorism and called the Kashgar area China's "front line in anti-terrorist efforts".
Rights groups and analysts accuse China's government of cultural and religious repression which they say fuels unrest in Xinjiang, which borders Central Asia.
The government, however, argues it has boosted economic development in the area and that it upholds minority rights in a country with 56 recognised ethnic groups.
Beijing has also suggested that extremists in Xinjiang are influenced by radical groups outside China, though many foreign analysts are sceptical, pointing instead to Uyghur dissatisfaction.
Deadly clashes involving Uyghurs and local police and security personnel are not unusual.
Last month, regional authorities said that police shot dead 13 people after they drove into a police building and set off an explosion.
And in June last year at least 35 people were killed when, according to state media, "knife-wielding mobs" attacked police stations, drawing fire from security personnel. AFP