Eleven Egyptian military personnel have been killed and dozens more wounded in a car bomb attack near the North Sinai city of el-Arish.
Al-Masri al-Youm newspaper said a convoy of buses carrying infantry soldiers was hit by a roadside bomb as it moved through the Kharouba area.
Attacks on security forces in the Sinai have increased since Islamist President Mohammed Morsi was ousted in July.
No group has yet admitted carrying out Wednesday's bombing.
The peninsula has grown increasingly unstable in recent years, triggered by the fall of President Hosni Mubarak.
His overthrow in February 2011 left the northern Sinai vulnerable to groups of jihadists, some with links to the Gaza Strip.
In September security forces launched an offensive against Islamist militants in the Sinai, but have suffered a spate of deadly bombings. In recent months some 100 members of the security forces have been killed.
Wednesday's attack, which took place at around 07:45 local time (05:45 GMT) on the road from Rafah to el-Arish, is thought to be the bloodiest against the military since Mr Morsi was deposed.
All 11 who died and the 37 reported injured were serving military personnel.
The attack is said to have targeted Egypt's Second Field Army, which has been deployed in Sinai and has been involved in an operation to destroy tunnels along Egypt's border with Gaza.
The soldiers were on their way back to Cairo on leave, reports said. Some of the most seriously wounded victims were being airlifted to hospital in the capital.
Communications with the area were cut as military helicopters circled over the area, searching for the attackers, BBC Cairo correspondent Orla Guerin reports.
Interim Prime Minister Hazem Beblawi condemned the attack and said the government was looking at "all the alternatives to deal with the ongoing terrorist incidents".
Egypt's military spokesman expressed his condolences and said the armed forces would continue to fight "black terrorism".
A local source said the bombing was in revenge for the army offensive which had destroyed militant hideouts and arms caches in Sinai.
Meanwhile, a Sinai-based jihadist group linked to al-Qaeda has admitted killing a high-ranking member of Egypt's National Security Agency outside his home in eastern Cairo this week.
Ansar Bayt al-Maqdis said it had shot dead Col Mohammed Mabruk, who had been due to testify against ex-President Morsi.
The colonel was believed to have helped uncover a network of Muslim Brotherhood members that had tried to help leaders of the movement flee the country after Mr Morsi was ousted. The former president is part of the Brotherhood.
In a separate incident in Cairo on Wednesday, at least three people were hurt in an attack on a police checkpoint. An explosive device was thrown and shots were fired at the checkpoint, reports said. It was not clear who was behind the incident.
The army deposed Mohammed Morsi on 3 July after days of mass protests and a military ultimatum to resolve the political crisis that had evolved between his Islamist supporters and opponents.
Mr Morsi and thousands of Brotherhood leaders and members have since been arrested. Hundreds of Morsi supporters died when two protest camps were violently broken up by the military in August.