Brazilian police have surrounded a Rio de Janeiro slum, after the end of a sunset deadline to drug traffickers to turn themselves in or face an assault.
Hundreds of police and soldiers, some in armoured vehicles, have been deployed around the Alemao favela.
Authorities say the operation aims to make the city safer ahead of the World Cup in 2014 and Olympic Games in 2016.
Drug gangs have fought back over the past week, firing on police and setting fire to cars and buses.
Local media reported hearing the sound of gunshots and grenades exploding as the security forces remain poised to move into the favela's steep and narrow alleyways.
Dozens of people - many of them suspected drug traffickers - have died in the violence.
"There is not the slightest chance traffickers can win in this war in Alemao," military police chief Sergio Duarte told reporters.
"We are in position to invade Alemao at any moment. It's better they give themselves in now and bring their weapons while there's still time, because when we invade, it's going to be more difficult."
The suspected traffickers fled to Alemao from the Vila Cruzeiro favela after police took control of it earlier this week.
The Reuters news agency reports that police are searching vehicles and pedestrians entering Alemao, and two men have been arrested after trying to flee the area.
Human rights organisation Amnesty International accused police of being too heavy-handed.
"The police response has put communities at risk," said Brazil researcher Patrick Wilcken.
"The authorities must ensure that the security and well-being of the broader population comes first and foremost in any operation carried out in residential areas."