The Al-Masoura district, which lies in the eastern town of Awamiya, has seen clashes between security forces and men the authorities have labelled as "terrorist elements".
Awamiya was the epicentre of an Arab Spring-inspired protest movement that broke out in 2011, partly led by a senior Shiite cleric from the town, Nimr al-Nimr, who was executed in January 2016 for "terrorism".
The latest violence began when construction work started to turn Al-Masoura into a commercial and cultural district.
The project would have seen many old abandoned houses demolished, to the anger of residents who demanded protection for the neighbourhood's historical heart.
The violence has led to the deaths of several protestors and security personnel.
On Wednesday, Minister of Information and Culture Awwad al-Awwad tweeted that the country's leadership had "eliminated terrorism and brought peace and security" to the area, praising the "success... of the security forces in cleansing Al-Masoura".
The Sabq news website said security forces had on Tuesday "taken control of Al-Masoura district of Awamiya and cleansed the area of terrorists... after security operations that led to the deaths of a number of terrorists and the arrest of others".
Residents of a nearby district, who had heard continuous gunfire over the past two weeks, said the area was quiet on Tuesday.
They said special forces had deployed at the entrances and inside the quarter, home to around 8,000 families.
The security services did not make an official announcement, but did take a group of journalists to visit the district on Wednesday.
Saudi Arabia's Eastern Province is the source of most of the kingdom's oil but also home to its Shiite minority, which regularly complains of discrimination by the Sunni-dominated authorities.