Turkey had on Saturday demanded the powerful Syrian Kurdish YPG militia withdraw from areas that it had captured in the northern Aleppo region in recent days from insurgents in Syria, including the Menagh air base. The shelling has targeted those areas.
Turkey has been alarmed by the expansion of Kurdish sway in northern Syria since the start of the conflict in 2011. The YPG controls nearly all of Syria's northern frontier with Turkey, and has been a close ally of the United States in the campaign against Islamic State (IS) in Syria.
But Ankara views the group as an extension of the Kurdistan Workers Party (PKK), which has waged a three-decade-old insurgency for autonomy in southeast Turkey.
Prime Minister Ahmet Davutoglu said on Saturday the shelling had taken place under "the rules of engagement against forces that represented a threat in Azaz and the surrounding area".
He demanded that the Menagh base be evacuated and said he had spoken to US Vice President Joe Biden to make that point and stress that the PYD was an extension of the PKK and a direct threat to Turkey.
The shelling intensified at 2 a.m. (0000 GMT) before dying down but not stopping, said the Observatory, which reports on the war using a network of sources on the ground.
The Kurdish-backed Syria Democratic Forces (SDF) alliance was also fighting Syrian insurgents near the town of Tel Rifaat in the province of Aleppo, the Observatory said.
One of the armed groups in the SDF, Jaysh al-Thuwwar, warned Turkey against any escalation, saying if it "has goals in our dear nation, we will defend our land and our people, and view it as a hostile party".
Syria's military, backed by Russian airstrikes, is fighting Syrian insurgents in the same area, trying to seal the frontier with Turkey and reclaim areas of Aleppo city held by rebels.
Syrian rebels say the YPG is fighting with the Syrian military and its allies against them in the five-year-old civil war.On Saturday, Turkey had also hit Syrian regime positions in northern Syria, responding to fire from regime forces into Turkey.
Saudi jets deployed to Turkey
Saudi Arabia has deployed warplanes to a Turkish airbase in order to "intensify" its operations against the Islamic State group (IS) in Syria, a senior Saudi defence official has said.
"The Saudi kingdom now has a presence at Incirlik airbase in Turkey," brigadier general Ahmed al-Assiri was quoted as saying by al-Arabiya television late on Saturday.
"Saudi warplanes are present with their crews to intensify aerial operations along with missions launched from bases in Saudi Arabia," Assiri said, without providing further details.
Turkish Foreign Minister Mevlut Cavusoglu said on Saturday that Saudi jets would be deployed at Incirlik, and that the two countries could participate in ground operations against IS in Syria.
Riyadh and Ankara are both opposed to Syrian President Bashar al-Assad, whose foreign minister last week warned that any ground intervention would "amount to aggression that must be resisted".
Assiri said the decision to deploy an unspecified number of jets to Turkey followed a meeting in Brussels of US-led anti-IS coalition members, who decided step up their fight against the militants in Syria and Iraq.
He stressed that Saudi had made its decision in coordination with the coalition and said that a ground operation was being planned.
"There is a consensus among coalition forces on the need for ground operations and the kingdom is committed to that," Assiri said.
"Military experts will meet in the coming days to finalise the details, the task force and the role to be played by each country."