The Sri Lankan government pulled out of a Norwegian-brokered truce with the LTTE in January. The navy's special boat squadron engaged the four boats of the Liberation Tigers of Tamil Eelam (LTTE) off Mullaitivu district and destroyed at least two of them, a navy spokesman said.
He said at least six guerrillas were believed to have died in the attack.
There were no immediate reports of casualties among security forces.
The sea battle came after the government said its forces had captured three strategic towns from the rebels.
The advances capped three days of psychologically important gains for government troops, who have been battling the rebels for more than 35 years, army chief Sarath Fonseka said.
Security forces entered the town of Mankulam, about 30 kilometres (20 miles) south of the Tamil Tig