Dozens of civilians and assailants were killed and injured in the attack by a gang armed with knives and axes, Chinese state media reported.
"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 Mondays incident, and information in Xinjiang is often difficult to verify independently.
Xinjiangs government web portal Tianshan on Wednesday described the violence as a "terror attack" that killed or wounded "several tens" of Uighur and Han.
The Han are Chinas largest ethnic group, whose members have migrated in large numbers to Xinjiang in recent decades.
Citing local Uighur sources, Dilxat Raxit, a spokesman for the World Uyghur Congress, an exile group, said in an e-mail: "Nearly 100 people were killed and wounded during the clash."
The violence came, he added, when "Uighurs rose up to resist Chinas extreme ruling policy and were met with armed repression resulting in dead and injured on both sides".
Raxit had earlier said more than 20 Uighurs were killed and 10 wounded, while a total of 13 armed Chinese personnel were killed or wounded and about 67 people were arrested.
The violence took place in Shache county, or Yarkand in the Uighur
language, near the edge of the Taklamakan desert in the west of the vast region.
According to Xinhua, it was "organised and premeditated".
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 Xinjiangs 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 Chinas southwest in March, which left 29 dead.
They came after a fiery vehicle crash at Tiananmen Square, Beijings 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 Chinas "front line in anti-terrorist efforts".
Rights groups and analysts accuse Chinas 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 Uighur dissatisfaction.
Deadly clashes involving Uighurs 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.