The operation, the most ambitious launched by Turkey in Syria conflict, is aimed at clearing jihadists from the town of Jarabulus which lies directly opposite the Turkish town of Karakamis, the prime minister's office said.
The operation began around 4:00 am local time (0100 GMT) with Turkish artillery pounding dozens of IS targets around Jarabulus.
"God willing, we will get a result in a short time, together with coalition forces and moderate (Syrian) opposition," Turkey's Interior Minister Efkan Ala told the state-run Anadolu news agency.
Turkish F-16 fighter jets and coalition war planes also hit targets inside Syria. Media said an unspecified number of elite Turkish special forces were already on the ground inside Syria.
Tensions had flared across the Syria-Turkey border the previous day, following rocket fire from Jarabulus which landed inside Turkey with the Turkish army firing howitzer rounds in response.
"The Turkish Armed Forces and the International Coalition Air Forces have launched a military operation aimed at clearing the district of Jarabulus of the province of Aleppo from the terrorist organisation Daesh," the prime minister's statement said, using an Arabic acronym for the IS group.
The operation also appeared aimed at pre-empting any assault by Jarabulus by pro-Kurdish militias who also oppose IS but Turkey accuses of seeking to carve out a Kurdish region in northern Syria.
- 'National security matter' -
In an earlier interview with private NTV television, Deputy Prime Minister Numan Kurtulmus said Ankara saw Jarabulus -- "as a national security matter".
"What we have said, since the beginning, is that having Jarabulus or any other city held by IS is unacceptable," he said.
Turkey will want to show with the operation that it is serious about taking on IS, which has been blamed for a string of attacks inside the country, the latest a weekend attack on a Kurdish wedding in Gaziantep that left 54 dead.
Ankara was long accused of turning a blind eye to the rise of IS in Syria and even aiding its movements to-and-fro across the border, claims the government had always vehemently denied.
The launch of the operation comes the day US Vice President Joe Biden is due in Ankara to meet Turkey's leadership, with agreeing a unified strategy on Syria set to be a crucial issue.
He is by far the highest-ranking Western official to visit Turkey since the coup attempt to unseat President Recep Tayyip Erdogan.
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- Special forces on ground -
Turkish F-16s bombed IS targets in Jarabulus, the private NTV television reported, the first such assaults since a November crisis with Russia sparked when the Turkish air force downed one of Moscow's warplanes.
A dozen IS targets were completely destroyed in the air strikes. Turkish artillery meanwhile destroyed 70 IS targets, television said.
Security sources quoted by Turkish television said a small contingent of special forces travelled a few kilometres into Syria to secure the area before a possible larger ground operation.
Television pictures showed Turkish tanks heading to the border but military sources told NTV they were changing place for security rather than crossing over.
NTV said that Russia had been informed of the action. Television pictures showed plumes of while smoke rising above Jarabulus.
Syrian activists have said hundreds of pro-Ankara rebel forces are waiting on the Turkish side of the border to take part in a ground operation to seize Jarabulus from the jihadists.
The incursion by Turkish special forces is the first such into Syria since February 2015, when hundreds of Turkish troops crossed the border to move the relics of the grandfather of the founder of the Ottoman Empire.
- Shifting policy? -
The movements have come at a critical juncture for Turkey in Syria's five-and-a-half-year war, with signs growing it is on the verge of a landmark policy shift.
Ankara has always called for the removal of President Bashar al-Assad, putting Turkey at odds with his main supporters Iran and Russia.
However Prime Minister Binali Yildirim acknowledged at the weekend for the first time that Assad was one of the "actors" in Syria and may need to stay on as part of a transition.
Turkey has been shaken by one of the bloodiest years in its modern history, with a string of attacks by IS jihadists and Kurdish militants and the botched July 15 coup.
The attack Saturday on a wedding party for a young couple has horrified the country, with the majority of the 54 victims aged under 18 and including children as young as four.
But there is confusion about who was behind the attack, with Erdogan initially saying the suicide bomber was a child aged 12-14 acting on the orders of IS.
However Yildirim on Monday said Turkey still had no clue who carried out the attack.