The battle for Handarat hill comes as the United Nations tries to broker a ceasefire deal between rebels and the regime in Syria's second city.
"Nine regime fighters and 21 rebels have been killed and regime forces have made an advance at Handarat," said Rami Abdel Rahman, who heads the Syrian Observatory for Human Rights monitoring group.
Handarat is just north of Aleppo, which has been divided since a rebel offensive in summer 2012 between loyalist sectors in the west of the city and insurgent-held territory in the east.
Keeping control of the strategic hill is vital for the rebels as it overlooks their main supply line from Turkey.
"If regime forces seize control of the entire region, the rebel sector of Aleppo would be under total siege," Abdel Rahman said.
Signup to our newsletter and follow us on Facebook and Twitter!
Syria's state news agency SANA, quoting a military source, said the army backed by pro-regime militiamen had taken Al-Maleh farms in Handarat's west and part of the southwest.
"A large number of terrorists were eliminated," SANA said of the rebels battling to overthrow the government of President Bashar al-Assad.
UN envoy to Syria Staffan de Mistura in October announced a plan for a "freeze" in fighting in Aleppo.
On Saturday, his deputy Ramzi Ezzedine Ramzi arrived in Syria to push for a truce in the country's former commercial capital, spokeswoman Juliette Touma said.
At the start of the week, De Mistura held what Touma called "constructive" talks on Aleppo with rebel groups in Gaziantep in Turkey.
Elsewhere in Syria, loyalist forces on Sunday battled jihadists from Al-Nusra Front, Al-Qaeda's Syria franchise, in the northwestern province of Idlib, the Observatory said.
The fighting broke out after the jihadists assaulted an army post, killing 12 soldiers, it said. Eight attackers were also killed.