The attack took place in the Makhmour region, a hotbed for Islamic State activity that sees regular attacks against Kurdish forces, Iraqi forces and often civilians.
Makhmour is a mountainous area about 70 km (45 miles) southeast of Mosul and 60 km (40 miles) southwest of the Kurdish capital of Erbil.
Kurdistan's Prime Minister Masrour Barzani called for greater security cooperation between Iraqi Kurdish and Iraqi security forces to stop Islamic State's insurgent activities.
Iraqi officials and analysts have long blamed a lack of coordination along a stretch of territory claimed by both Baghdad and Erbil for Islamic State's continued ability to wage deadly attacks.
Islamic State controlled roughly a third of Iraq between 2014 and 2017, including the remote Makhmour region but also major cities including Mosul.
A loose coalition of U.S.-led forces, Iraqi and Kurdish troops and Iran-backed Shi'ite militias defeated the Sunni Muslim extremist group in 2017, but its members still roam areas of northern Iraq and northeastern Syria.
Western military officials say at least 10,000 Islamic State fighters remain in Iraq and Syria.
A statement from the Kurdistan region's armed forces, the peshmerga, said Islamic State militants attacked the village in the early hours of Friday killing three residents.
It said peshmerga forces intervened, resulting in clashes that killed at least seven of their soldiers.
Kurdish security and hospital officials said the final death toll was at least 10 peshmerga soldiers and three villagers.
There was no immediate claim by Islamic State for the attack. The group regularly wages assaults against security forces and civilians in the area.
(Reporting by Ali Sultan; Additional reporting by John Davison in Baghdad and Lilian Wagdy in Cairo; Editing by Edmund Blair)

MOSUL, IRAQ - FEBRUARY 24: A view of Al-Tahira Syriac Catholic church, built in 1862, which was extensively destroyed during the war with ISIS on February 28, 2021 in Mosul, Iraq. The church is an area of 1,344 square meters. UNESCO started rebuilding the church in June 2020, as part of the Revive the Spirit of Mosul initiative. Around 3,000 tons of rubble was removed on this site, in addition to ten IEDs and one dead body of ISIS. During the city's occupation, the church was used as a court by ISIS. It is located in West Mosul in a complex of other churches, including the ancient al-Tahira church. More than four years after the battle to reclaim Mosul from the Islamic State, groups of Christians and Muslims are working together to restore many religious sites across the city. The old city of Mosul, home to historic mosques and churches was devastated during fighting and much of the city still lies in ruins, however the city is working to clean and restore the sites and prepare the city for the much-anticipated visit of Pope Francis to Iraq in March. (Photo by Hawre Khalid/Getty Images)
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