An 11-hour gunbattle broke out after police entered the remote town of Mamasapano, held by the Moro Islamic Liberation Front (MILF), around 3:00 am Sunday (1900 GMT Saturday) without coordinating with the rebels as required under their ceasefire agreement.
The bodies of 49 police have been recovered from the town on Mindanao island and moved to an army camp, regional police spokeswoman Judith Ambong told AFP.
She did not say whether any MILF members were killed.
Police had been targeting two high-profile terror suspects in the operation.
"This is going to be a big problem," the MILF's chief peace negotiator Mohagher Iqbal told AFP when asked how the fighting would affect the peace process.
But he and government officials said the ceasefire still held.
Philippine national police chief Leonardo Espina and interior and local government secretary Manuel Roxas flew to Maguindanao on Mindanao island on Monday.