Five Peruvian soldiers were killed, and another five were wounded when they were ambushed over Wednesday night.
They were ambushed by members of the Shining Path, when they entered the rebels' territory, during a night mission.
It has been suggested that the soldiers were under equipped for their mission, as has happened in the past.
The Shining Path is a long time Maoist group, that has taken refuge in the country's jungles.
Peru's government is concerned that the group may have allied with drug producers, who are adding to the rebels' financial ability.
The US government considers Peru to be the largest cocaine producer, in the world.
Police and the military in Peru have been attempting to fight the drug trade, which may have encouraged the alliance between the drug producers and the Shining Path.
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