"There were violent incidents in Divo that left at least two dead according to local administration authorities," said a security officer loyal to President Laurent Gbagbo.
Calm was restored by Sunday afternoon, but only after the centre of town, about 200 kilometres northwest of the capital Abidjan, was turned into a wasteland with burning tyres and smashed shop windows.
Security services with AK-47s and flak jackets were deployed to restore order, but were preparing for further violence sparked by youths armed with rifles and machetes.
A resident of Divo has confirmed that clashes broke out between opposition youths and hardline Gbagbo supporters, known as the "Young Patriots".
The fighting erupted over Ivory Coast's divisive identification scheme, a crucial precursor to upcoming elections imposed by the UN following allegations of vote fraud.
Two people died in the unrest and the local hospital said another 36 people were admitted, most injured with knives and hunting guns.
They were placed in different wards according to whether they were Gbagbo supporters or opposition activists.
One witness said shops were pillaged and a market was set on fire.
"The only way to restore calm is to suspend the identification process. We cannot accept this vast fraud operation," Pascal Affi N'Guessan a spokesman for President Gbagbo’s FPI party.
A spokesman for the opposition RDR party gave a different version of events, saying its militants were attacked.
The RHDP opposition alliance called for the identification scheme to continue despite the violence.
RHDP says that Mr Gbagbo committed to the scheme last July in the presence of UN Secretary General Kofi Annan and all Ivorian parties.
The UN peacekeeping mission in Ivory Coast said it had sent a team to Divo to investigate.
The UN-backed scheme will see identification cards issued to 3.5 million unregistered people to enable the compilation of reliable voters' rolls and create conditions for free and fair elections.