The well-planned daylight assault in a highly fortified zone of the capital was a bold challenge to Kabul's authority just a week after the Taliban opened a political office in Qatar as the Islamic militant movement said it was willing to begin a U.S.-led peace process.
NATO also formally handed over security for the entirety of the country to Afghan forces just last week. The NATO-led International Security Assistance Force said it was standing by if needed during the skirmish, Afghan authorities did not call them in for help and thwarted the attack on their own.
The gunbattle started around 6:30 a.m. near the east gate leading to the palace next to the Afghan Ministry of Defense and the former Ariana Hotel, which former U.S. intelligence officials have confirmed is used by the CIA. One carload of Taliban fighters dressed in military-style camouflage uniforms emerged from their black Land Cruiser and started shooting, after another got stuck between two checkpoints and detonated their explosives-laden vehicle.
The Taliban said all eight of its fighters died in the attack, while the Interior Ministry said three security guards were killed and another wounded.
The attack was a bitter reminder of the ability of the Taliban to penetrate the heart of the capital, showing their strength in the fight against President Hamid Karzai's Western-backed government.
Though the Taliban have indicated they are willing to open peace talks, they have not renounced violence and attacks have continued across Afghanistan.
The palace is in a large fortified area of downtown Kabul that also includes the U.S. Embassy and the headquarters for the NATO-led coalition forces and access is heavily restricted. Some Kabul residents initially thought the gunfire was a coup attempt because the idea of a Taliban attack within the security zone seemed so unlikely.
The attackers were stopped in Ariana Square, at least 500 meters (yards) and several checkpoints away from the palace itself. Karzai was reportedly in the palace at the time.
A group of journalists, including from The Associated Press, waiting to enter the palace grounds for a news event on Afghan youth witnessed the start of the attack and took cover behind a religious shrine, pulling a boy off the street who had been caught in the open on his way to school.
Karzai had been expected to talk about ongoing efforts to open peace talks with the Taliban.
The Taliban have refused to negotiate with Karzai's government in the past, saying the U.S. holds effective control in Afghanistan, but the Americans are hoping to pave the way for talks between the two sides. Long-stalled negotiations have taken on urgency with Afghan presidential elections and the withdrawal of most U.S. and other foreign combat troops looming in 2014.
The Americans announced last week that they would begin formal talks with the Taliban in the Qatari capital of Doha, which would be followed by talks between the Taliban and the Afghan government.
Kabul police chief Gen. Mohamad Ayub Salangi said the gunmen jumped out of their SUV and opened fire after the second vehicle was stopped by security forces while trying to use fake documents to get through a checkpoint. The second vehicle's car bomb then exploded.
Taliban spokesman Zabiullah Mujahid claimed responsibility, saying in an emailed statement that "eight of our suicide bombers were able to reach the most secure area of Kabul," identifying them by name and saying they were carrying hand grenades, a machine gun and rocket-propelled grenades.
"The brave mujahedeen, with special tactics and help from inside, were able to reach their target with their weapons and cars," he said. He said their targets were the CIA building, the palace and the Defense Ministry and claimed "a number of foreign invaders were killed and wounded in the attack."
Smoke could be seen coming from the area of the hotel, but there was no immediate indication any of the buildings were hit in the attack and Afghanistan's Kabul division army commander Gen. Kadam Shah Shahim said he knew of no deaths among security forces or civilians.
The NATO-led coalition in Afghanistan instituted a camp lockdown during the incident.
U.S. Ambassador James Cunningham urged an end to the violence.
"All of the attackers were killed, without success in achieving their goals - This again demonstrates the futility of the Taliban's efforts to use violence and terror to achieve their aims," he said in a statement. "We again call on the Taliban to come to the table to talk to the Afghanistan government about peace and reconciliation."
The U.S. Embassy cancelled all consular appointments and advised American citizens in Kabul to stay indoors.
Also early Tuesday, in the southern province of Kandahar, a minibus hit a bomb buried in the road, killing 11 members of a groom's family on their way to an engagement party, said Kandahar governor's spokesman Ahmad Jawed Faisal. Faisal said the dead included eight women, two children and a man, and two other men were also wounded.
In Oruzgan, the province north of Kandahar, provincial governor's spokesman Abdullah Hemat said Tuesday that six Afghan national police were killed the day before when their patrol was attacked with a roadside bomb.
And a NATO convoy was hit with a roadside bomb in the province Ghazni, southwest of Kabul, destroying a vehicle but the coalition said there were no casualties.