Afghan and foreign troops battled the insurgents who targeted the US embassy and NATO headquarters, sowing fear and confusion and raising fresh questions over the government's ability to secure the country even after a ten-year war.
The standoff ended when troops finally killed the two last insurgents who had held out overnight in a high-rise building under construction just a few hundred metres from the heavily guarded US embassy.
"The last attackers are dead and the fighting all over. There were six terrorists in the building and all are dead," interior ministry spokesman Siddiq Siddiqui told AFP.
But by holding the city hostage over two days in their longest attack on the capital yet, the insurgents demonstrated their increasing confidence with the latest in a string of attacks on Western targets in recent months.
The raid was another sign that security has deteriorated sharply in Kabul, which was hit with a suicide bombing on the British Council cultural body last month and the storming of the luxury Intercontinental Hotel in June.
The latest standoff came to an end after helicopters from the NATO-led International Security Assistance Force (ISAF) were sent in to assist Afghan forces, but Siddiqui did not say how the last insurgents were killed.
The Taliban fighters, armed with suicide vests and rocket-propelled grenades, unleashed wave after wave of heavy explosions and gunfire after the attack started at around 1:30pm Tuesday.
ISAF spokesman Lieutenant Colonel Jimmie Cummings said 11 Afghan civilians including three children were killed in the fighting, which included three smaller, related suicide bombings in Kabul.
Siddique said that three police officers had also been killed. Some 28 people are believed to have been injured, most of them civilians.
Cummings said that six foreign soldiers were also injured in the attacks, three US troops who were defending ISAF's base from attacks and the others in the operation to clear the construction site of insurgents.
The brazen Taliban raid comes two months after NATO began a security handover to Afghan forces which will see a staged withdrawal of US-led combat troops due to finish in 2014.
Afghan forces are in charge of security in Kabul but frequently call on foreign troops for support in the event of major attacks.
At the US embassy, which blared out warnings for staff to take cover and avoid standing near windows as the attacks unfolded, spokeswoman Kerri Hannan said Tuesday there were no deaths or injuries among the hundreds of staff.
The embassy confirmed the building had been targeted with rocket-propelled grenades and small arms fire and that four Afghans had been injured, three applying for visas and one local security guard.
Secretary of State Hillary Clinton vowed that the "brave" Americans who work at the embassy would not be intimidated by such attacks.
"We will take all necessary steps not only to ensure the safety of our people but to secure the area and to ensure that those who perpetrated this attack are dealt with," she said.
The giant, high security US embassy compound borders the ISAF compound where thousands of foreign troops live and work.
Video released by NATO showed foreign forces taking up positions within ISAF headquarters Tuesday and shooting back at insurgents as they defended themselves from attack.
A Taliban spokesman told AFP by text message that the targets were ISAF headquarters, the US embassy and Afghanistan's intelligence agency, the National Directorate of Security (NDS) and other "sensitive government places".
Witnesses told of their terror as events unfolded.
"I was sitting in my shop when suddenly I heard an explosion and then another one. Then there was gunfire," said Abdulbaqi, a local shopkeeper.
"People on the streets started running. I had to leave my shop to get to safety."
President Hamid Karzai insisted the raid would not derail the security transition process but would "embolden our people's determination in taking the responsibility for their country's own affairs".
NATO Secretary General Anders Fogh Rasmussen also said his organisation had "confidence" in the Afghan authorities and the transition process which has seen Kabul and six other parts of the country handed over.
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In GHQ Pakistan and Manawa Training Center attacks, the terrorists manged to infiltrate through the guarded compounds, however, in this [Kabul] attack; the terrorists could only blow up them selves on a public round-about and entered an under construction building 400 meters away from the US Embassy - and did no harm to the Embassy staff. Similarly, in the GHQ and MTC attacks terrorists took security forces hostages and killed many of them. In this attack, fourteen people including six terrorists, four civilians and only four policemen were killed.
Pretty similar to attacks on GHQ Pakistan, FIA Lahore, Manawan Training Center Lahore ...
Does this not resemble like 26/11 attack?