One fighter was killed when a convoy of Kurdish Peshmerga was attacked by forces of the Kurdistan Worker's Party (PKK) on Wednesday.
Iraqi leaders condemned the assault, which took place in the northern Kurdish province of Duhok. Several Peshmerga were wounded.
“Any attack on Peshmerga forces constitutes an attack on the Kurdistan Region, its institutions and its people,” Iraqi Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani said on Thursday.
Peshmerga forces “have a mandate to protect the constitutional and federal status of the Kurdistan Region”, Mr Barzani said.
Kurdish President, Nechirvan Barzani, said the attack "creates tension in which there is no winner."
"At a time when the people of the Kurdistan Region are facing numerous crises and hardships, this aggression and escalation by the PKK only exacerbates the situation in the region and inflicts more damage upon our people," he said.
The PKK must respect the constitutional entity of the Kurdistan Region, its government, and lawful institutions, he said.
"It must also keep provocations and hostilities away from the Kurdistan Region."
The PKK is a separatist group that has waged a decades-long insurgency in neighbouring Turkey.
It took up arms against the Turkish state in 1984, waging an insurgency for autonomy in Turkey’s largely Kurdish southeast. Since then, more than 40,000 people have been killed in the conflict.
Kurds, as an ethnic group, form about 20 percent of Turkey’s population.
But the PKK are under heavy pressure from a Turkish military assault on its bases in northern Iraq, and from Iraqi and Kurdish authorities that want it removed from areas along the Syrian border.
KRG spokesman, Jotiar Adil, told The National that the government will take measures to avoid any kind of internal conflict from erupting.
"The KRG does not know if the PKK attacks will happen again or not, but it will take measures to prevent such attacks from being repeated," Mr Adil said.Erbil is committed to protecting its people future attacks but "does not know if the attacks will continue," he said.
Baghdad’s central government condemned the attack and said it would take strict measures to “end all assaults that violate the security and sovereignty of Iraq.”
Northern Iraq is split between the control of Iraqi and Kurdish forces, Shiite militias and smaller armed groups.
The Kurdistan Democratic Party, led by the Barzani family, dominates Erbil and shares with Turkey a common enemy in the PKK.
The Erbil government relies on Turkish pipelines to export oil.
Prior to Wednesday's attack, a blast targeted an oil pipeline in the north of the country, according to the KRG last Friday.
The KRG said oil exports were suspended after terrorists attacked the pipeline crossing the autonomous region to the Turkish port of Ceyhan.
It did not specify on whose territory the explosion took place nor who might have been behind it.
