"Seven members of Hezbollah were killed and 31 wounded" in the clashes which raged from Saturday until last night, said Rami Abdel Rahman, head of the Syrian Observatory for Human Rights.
He told AFP that the Syrian rebels lost nine fighters and 23 of them were wounded in the battle waged in an undemarcated area of the border between Qalamun in Syria and Lebanon's Arsal.
Hezbollah initiated the showdown in a bid to rid the region of rebel fighters following a string of daily clashes, said Abdel Rahman.
Giving a higher death toll of eight Hezbollah fighters killed, a wounded member of the Shiite group told AFP on condition of anonymity: "The battle was very fierce, and at very close quarters."
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The long and porous border region is often used by smugglers, refugees and fighters.
Arsal and the area around it are largely Sunni Muslim, and residents sympathise with the Sunni-led uprising against Syrian President Bashar al-Assad.
In April, Syrian forces backed by allied fighters from Hezbollah retook control of most of the Qalamun region.
Last month, Lebanese army forces carried out raids in the area targeting militants with ties to "terrorist groups", an army statement said at the time.