Armenia said at least 49 of its soldiers were killed, while Azerbaijan said it lost 50.
The fighting erupted minutes after midnight, with Azerbaijani forces unleashing an artillery barrage and drone attacks in many sections of Armenian territory, according to Armenia's defence ministry.
It said shelling grew less intense during the day, but that Azerbaijani troops were trying to advance into Armenian territory.
Azerbaijan's foreign ministry said it was responding to a "large-scale provocation" by Armenia late on Monday and early Tuesday.
It said Armenian troops planted mines and fired on Azerbaijani military positions.
The two countries are locked in a decades-old conflict over the Nagorno-Karabakh region, which is part of Azerbaijan but has been under the control of ethnic Armenian forces since a separatist war there ended in 1994.
Azerbaijan reclaimed broad swathes of Nagorno-Karabakh in a six-week war in 2020 that killed more than 6600 people and ended with a Russia-brokered peace deal.
Moscow deployed about 2000 troops to the region to serve as peacekeepers under the deal.
The Russian Foreign Ministry on Tuesday urged both parties "to refrain from further escalation and show restraint".
Moscow has engaged in a delicate balancing act in seeking to maintain friendly ties with both ex-Soviet nations.
It has strong economic and security ties with Armenia, which hosts a Russian military base, but has also been developing close co-operation with oil-rich Azerbaijan.
The international community also urged calm.
UN Secretary-General Antonio Guterres urged Armenia and Azerbaijan "to take immediate steps to de-escalate tensions, exercise maximum restraint and resolve any outstanding issues through dialogue" and implement previous agreements, his spokesman said.
The UN Security Council scheduled closed consultations for Wednesday on the renewed fighting.
Armenian Prime Minister Nikol Pashinyan called Russian President Vladimir Putin and later also had discussions with French President Emmanuel Macron, European Council President Charles Michel and Iranian leader Ebrahim Raisi.
Russia's Foreign Minister Sergey Lavrov spoke by phone with his Azerbaijani counterpart, Jeyhun Bayramov.
US Secretary of State Antony Blinken spoke with Pashinyan and Azerbaijan's president, Ilham Aliyev.
The US has a special envoy in the region, Blinken said, "and my hope is that we can move this from conflict back to the negotiating table and back to trying to build a peace".
Armenia said the Azerbaijani shelling on Tuesday damaged civilian infrastructure and wounded an unspecified number of people.
On Facebook, Aliyev expressed condolences "to the families and relatives of our servicemen who died on September 13 while preventing large-scale provocations committed by the Armenian armed forces".
Turkey, a strong ally of Azerbaijan, also placed the blame for the violence on Armenia. President Recep Tayyip Erdogan expressed support for Aliyev and said in a statement Turkey and Azerbaijan are "brotherly ... in all matters".
The governor of Gegharkunik province, one of the regions that came under Azerbaijani shelling, said there was a 40-minute lull in the fighting, apparently reflecting Moscow's attempt to negotiate a truce, before it later resumed.
The governor, Karen Sarkisyan, said four Armenian troops in his region were killed and another 43 were wounded by the shelling.
The Armenian government said it would officially ask Russia for assistance under a friendship treaty between the countries, and also appeal to the United Nations and the Collective Security Treaty Organisation, a Moscow-dominated security alliance of ex-Soviet nations.
