Some 300-400 border guards from the Bangladeshi Rifles took over their headquarters, demanding better pay and conditions.
Television pictures showed Bangladeshi army soldiers closing off the area, and smoke could be seen coming from some of the buildings and gunfire could be heard.
At least one civilian was killed by stray gunfire outside the walls of the base, and several were injured. There are reports of four dead within the compound, where a conference with high-ranking officers was taking place.
The border guards said one senior officer had been killed and several injured, the Bangladeshi Star newspaper reported on its web site. Representatives of the mutineers met with the prime minister as part of efforts to resolve the situation.
The Bangladesh Rifles is a paramilitary force, but the conflict between the top brass and lower-ranking troops has been building over the last 20 years because all of the top posts have been filled by Bangladeshi army officers, meaning long-serving border guard officers have no hopes for promotion and live on very low wages in comparison to their superiors.