Police helicopters flew over the Ajegunle area which was the main scene of the fighting as anti-riot policemen poured into the district amid the constant sound of gunfire.
Smoke rose into the sky over Lagos's main Apapa Port area, leading to Ajegunle where dozens of cars and homes were burnt.
The fighting between Nigeria's two largest ethnic groups began on Saturday in the central Nigerian city of Ilorin in a dispute over the naming of a Yoruba traditional ruler for the town.
Police clashed with a Yoruba militant group, the Odua Peoples' Congress (OPC). Police said six people died but the OPC said nine had been killed.
On Sunday, OPC members launched what a senior OPC official said were reprisal attacks on Hausas living in Lagos.
OPC secretary-general Kayode Ogundamisi told AFP on Monday the killings were regretted and admitted his organisation could not control its members.
"The bloodshed is not worth it. It does not portray our cause well at all," he said.
At a police barricade set up on Tuesday on the Malu Road into Ajegunle from Lagos Island, police caught two Yoruba men, one of them disguised as a woman and carrying a machete, trying to enter the area.
Rumours - likely to inflame the situation - circulated that the Hausa leader of the Ajegunle district had been killed early on Tuesday.
Lagos State Governor Bola Tinubu on Monday night slapped a dusk-to-dawn curfew on the area around Ajegunle and on Tuesday convened an emergency meeting of the leaders of the ethnic Yoruba and Hausa communities.
Lagos Information Commissioner Dele Alake told AFP the city authorities were "doing a lot" to try to restore calm.
"We really want to get the situation under control," he said.
Meanwhile, witnesses put the toll from the clashes in Lagos at at least 72.
Victoria Adeleke, a nurse who was working in Lagos's Alaba district where fighting took place on Monday, told AFP she had counted 22 bodies on the street.
Another witness, Patrick Adum, said he had seen 20 bodies in the Okokomaiko district of the city.
Other witnesses said they had seen eight bodies in the Orile district and 21 bodies on the outskirts of Ajegunle, the main area where fighting took place.
The fighting again focused attention on the OPC, set up in 1995 to promote the interests of the Yoruba, one of Nigeria's three largest ethnic groups, alongside the Hausa and Igbo.
The OPC is accused by its critics of being behind a series of attacks on other ethnic groups in the Yoruba-controlled southwest of the country.
The government of President Olusegun Obasanjo, himself a Yoruba, last year threatened an all-out war against the OPC after blaming it for riots in Lagos's Ketu district in which more than 100 people - mainly Hausas - died.
Since then, though regular clashes have occurred with the police, the most prominent OPC leaders have continued to operate publicly. - Sapa-AFP