The special forces were on the ground in noncombat roles "coordinating and guiding" the battle against Houthi forces and fighters loyal to former Yemeni President Ali Abdullah Saleh, the source said. They also have helped parachute in weapons and communications equipment.
Houthi rebels, meanwhile, withdrew from the presidential palace and other key parts of the southern port city of Aden following heavy Saudi airstrikes, according to the source.
The withdrawal signaled a reversal from rebel gains the previous day, when Houthi forces seized the presidential palace. President Abdu Rabu Mansour Hadi, who fled the country last month, had stayed for a period of time after Houthis secured control of the capital, Sanaa, in January.
Houthis had controlled most large districts in Aden amid ongoing clashes.
The latest action heats up an already intense conflict that could have ramifications across the Middle East. If the Saudi-led coalition of nine countries takes the fight to the ground in Yemen, the consequences could be severe.
Houthis are battle-hardened guerrilla fighters and could cross into Saudi Arabia. They've already threatened suicide bomb attacks inside Saudi Arabia.
Yemen, already the home base to al Qaeda in the Arabian Peninsula, teeters on the brink of becoming a failed state and an even more fertile breeding ground for extremism.
The United Nations, citing reports from humanitarian partners, said 519 people have been killed and nearly 1,700 others wounded in the past two weeks.
Tens of thousands of people have fled their homes and sought refuge in Djibouti and Somalia, Valerie Amos, under-secretary-general and emergency relief coordinator, said in a statement.
Two humanitarian workers were killed Friday in Yemen.
The brothers working for the local branch of the Yemen Red Crescent Society were shot in Aden while evacuating wounded people to a waiting ambulance, the International Committee of the Red Cross reported. They were identified as Khaled Ahmed Bahuzaim and Mohammed Ahmed Bahuzaim.
Two Saudi border guards were killed Friday after an exchange of fire with Houthi rebels along the kingdom's frontier with Yemen, officials told CNN.
A border guard was killed in a cross-boundary fire exchange with militants, the Saudi Press Agency reported Thursday. That marked Saudi Arabia's first publicly known military death since it launched airstrikes against rebels inside its southern neighbor.
U.S. Navy warships were patrolling off Yemen in search of suspicious shipping in the region, in particular any weapons shipments from Iran to the Houthi rebels they are supporting in Yemen, a U.S. defense official told CNN on Thursday.
The Navy this week came across a Panamanian-registered cargo ship that had left an Iranian port, the official said. Based on the route of the ship from Iran to Yemen, the Navy declared it a "vessel of interest" and requested permission from the captain to search it.
The ship was found to be carrying cement and construction materials, the official said. It was sent on its way.
The offshore area has been a route for weapons smuggling into Yemen, as well as Sudan and Gaza, so the Navy has maintained a regular surveillance presence there. The official said that increased fighting in the last several days in southern Yemen has resulted in other ships trying to dock to help civilians leave the country.
Saudi and allied warplanes struck rebels in Yemen last week, with Saudi Arabia threatening to send ground troops and inserting itself into its southern neighbor's civil war.
The swift and sudden action involved 100 Saudi jets, 30 from the United Arab Emirates, 15 each from Kuwait and Bahrain, 10 from Qatar, and a handful from Jordan, Morocco and Sudan, plus naval help from Pakistan and Egypt, according to a Saudi adviser.
The Houthi rebels are Shiite Muslims who have taken over Sanaa and had captured parts of its second-largest city, Aden. The Sunni Saudis consider the Houthis proxies for the Shiite government of Iran and fear another Shiite-dominated state in the region.