Papuan separatists are suspected of killing at least 24 Indonesian construction workers in Papua's Yigi district.
An Indonesian military spokesman said the violence started after an armed criminal separatist group held a ceremony to commemorate Papua's independence from Dutch colonial rule on December 1st 1961.
He said one of the workers appeared to have taken a photo which sparked the attack.
Police said another eight workers escaped but seven of them were caught and also killed.
AFP reported a soldier was killed while investigating.
It was not clear who the assailants were.
Commemorating the day is prohibited in Indonesia, and raising the separatist Morning Star flag is a criminal offence.
Following a UN-approved vote in 1969, Papua became part of Indonesia.