The Taliban immediately claimed responsibility for the coordinated assault that began with suicide bombings on official buildings and a militia base in the provincial capital Trinkot.
It is the deadliest insurgent attack in Afghanistan for several weeks and comes after NATO-led forces symbolically handed over security control of seven areas in the war-torn country to Afghan troops.
"There are 17 killed and 37 people are wounded so far," said provincial health director Khan Agha Miakhail, adding that there were children among the dead and warning that the toll may rise.
The BBC said that one of its Afghan reporters, Omid Khpalwak, was among those killed.
Khpalwak also worked for Afghan news agency Pajhwok and its regional editor Javid Hamim Kakar confirmed his death.
"Yes. His brother confirmed that he died and his body is in the Uruzgan central hospital," Kakar told AFP.
One explosion happened just outside the gates of the deputy governor's office, which is next to the main hospital for Trinkot.
"There were two blasts at the deputy governor's office. One was detonated by a suicide bomber and the other was caused by an ANA (Afghan army) soldier shooting another suicide attacker," said army spokesman Hekmatullah Kuchi.
"The second suicide blast took place at Matiullah Khan's base, who is not wounded," said Kuchi, referring to a well-known militia commander in the area.
Public health ministry spokesman Kargar Noorughli told AFP that a policeman and a child had been among those killed in the suicide blast at the deputy governor's office.
An eyewitness who asked not to be named told AFP that five explosions were heard in the area.
"I saw two myself from our roof. One near Matiullah's (place) and the other by the government compound. There was shooting in the streets," she said.
The militia commander's base and the deputy governor's offices are about one kilometre (less than one mile) apart, said Kuchi. Earlier reports said the police chief's office had been targeted.
A spokesman for NATO's International Security Assistance Force said it had sent reinforcements to the scene, including helicopters, to assist in quelling the assault.
Taliban spokesman Qari Yousuf Ahmadi told AFP that the attackers were from the insurgent group, but denied killing the reporter, saying the police were responsible for his death.
"Seven of our volunteers have attacked the deputy governor's office and Matiullah's base," said Ahmadi.
Matiullah Khan commands around 2,000 fighters protecting NATO convoys along the highway that runs from Uruzgan to Kandahar city further south.
His uncle Jan Mohammad Khan, the former governor of Uruzgan and a close ally of President Hamid Karzai, was killed in a gun attack on his Kabul home nearly two weeks ago, five days after the president's half-brother was shot dead in Kandahar.
Matiullah Khan told AFP that the insurgents had attacked just outside his base, launching the assault from a neighbouring television station building.
He said two of his men had been wounded.
"I'm sitting right here in my base. I'm fine and healthy," said Khan.
Khan inherited his militia from his uncle when the latter left his role as governor, after being forced out over alleged ties to the drugs trade.
Experts say Jan Mohammed Khan, who hailed from a powerful family from the Popalzai tribe in the volatile southern region, had a reputation for brutality and double-dealing with tribal rivals, falsely accusing some of being Taliban.
The latest southern unrest comes at a critical juncture in the nearly 10-year war on Taliban-led insurgents, as thousands of US surge troops prepare to go home and other Western nations announce limited withdrawals of soldiers.
All foreign combat forces are due to leave Afghanistan by the end of 2014 and last week a first tranche of handovers from NATO to Afghan forces took place in seven parts of the country.