The attacks have undermined trust between coalition and Afghan forces, who are under mounting pressure to contain the Taliban insurgency before most NATO combat troops withdraw by the end of 2014.
The killings, the worst in a string of similar attacks in recent months, occurred at a remote Afghan Local Police (ALP) outpost in the eastern province of Ghazni.
"An infiltrated local policeman first drugged all 17 of his comrades, and then called the Taliban and they together shot them all," the chief police detective for Ghazni, Mohammad Hassan, told Reuters.
Seven of the dead were new recruits still undergoing training, officials said.
The Taliban claimed responsibility for the attack in a text message by spokesperson Zabihullah Mujahid.
The rapidly growing ALP programme is an American-designed initiative designed to recruit local men as security officers for their area.
The force has been beset by allegations of abuse and widespread corruption.
In September, Afghanistan suspended the training of new ALP recruits following a spate of insider attacks on foreign soldiers.
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