"Four gunmen riding a vehicle in the south of Sheikh Zuweid exchanged fire with the security forces that managed to kill them, besides 15 other militants who were killed separately in different parts of the city," Xinhua quoted the source as saying late Sunday.
The raid was part of a massive security campaign waged by the Egyptian military in cooperation with the police against militant groups.
Those militants have been prevailing in the peninsula since the ouster of former Islamist president Mohamed Morsi by the military last year following mass protests against his one-year rule and his currently-blacklisted Muslim Brotherhood group.
On Saturday, a similar raid in the same city killed eight militants and destroyed 31 huts, 10 vehicles and 20 bikes belonging to them.
Since Morsi's removal, extremist groups have launched a series of bombings in Sinai, the capital Cairo and some other governorates nationwide, targeting security personnal and premises. Sinai-based Al Qaeda-inspired Ansar Bayt al-Maqdis group, now labelled as a terrorist organisation by Egypt and the US, has claimed responsibility for most of the attacks.
Security crackdown on Morsi's loyalists has left about 1,000 killed and thousands others arrested over the past 10 months.
Ex-military chief Abdel-Fattah al-Sisi, who led Morsi's overthrow, has been inaugurated as the country's president earlier this month.