A NATO soldier, a civilian contractor and three Afghan troops died in an exchange of fire Saturday evening in Wardak province west of the capital Kabul, the International Security Assistance Force said.
A US official confirmed that the US troop was the 2000th US soldier to die in the long-running battle.
ISAF commander General John Allen told US 60 Minutes program in an interview recorded before the latest incident, and scheduled to be aired today, that insider attacks were unacceptable.
"I'm mad as hell about them, to be honest with you," he said. "We're willing to sacrifice a lot for this campaign, but we're not willing to be murdered for it."
Gen Allen said that just as homemade bombs had become the signature weapon of the Iraq war, he believed that in Afghanistan, "the signature attack that we're beginning to see is going to be the insider attack".
Deputy ISAF commander Lt. Gen. Adrian Bradshaw told a hastily-called press conference that the latest incident was still under investigation.
"The circumstances were somewhat confused and we are establishing the full facts," he said.
"The incident occurred while an ISAF unit was manning a temporary check point in an area near an Afghan National Army unit.
"According to ISAF and ANA reporting, after a short conversation took place between ANA and ISAF personnel, firing occurred which resulted in the fatal wounding of an ISAF soldier and the death of his civilian colleague.
"In an ensuing exchange of fire three ANA personnel are reported to have died."
Provincial police spokesman Abdul Wali said that the shooting broke out after "a verbal dispute" between the two sides.
Ministry of Defence deputy spokesman General Daulat Waziri said the incident was a result of a "misunderstanding", adding that it was investigating whether insurgent fire was involved.
Three ANA soldiers were killed and three wounded, he said.
The shootout comes amidst heightened tensions between NATO troops and their Afghan allies in the wake of spiralling "green-on-blue" attacks in which Afghan security forces turn their weapons on their Western allies.
At least 51 coalition troops have been killed in such assaults this year - about 15 per cent of all NATO deaths - and the top ISAF general has described them as "the signature attack" of the Afghan war.
The scale of the insider assaults is unprecedented in modern warfare, and has seriously undermined trust between NATO coalition forces and their Afghan allies in the joint effort against Taliban insurgents.
NATO attributes about 25 percent of the attacks to infiltration by Taliban insurgents into Afghan security forces while the rest are believed to result from cultural differences and personal animosities between the allies.
Efforts to combat the phenomenon include orders that NATO soldiers working with Afghan forces should be armed and ready to fire at any time, even within their tightly protected bases, and the issuing of cultural guidelines.
The guidelines, drawn up by the Afghan defence ministry, urge their soldiers not to take offence if NATO colleagues exit the shower naked, swear or ask to see pictures of their wives.
This is normal behaviour and no reason to open fire, the 28-page brochure says.
The assaults pose a serious threat to the NATO war effort, which has portrayed the advising and training of Afghan forces as the key to the scheduled pullout of Western troops in 2014.