The battles are the first between the army and ex-rebels in Juba since rebel leader Riek Machar returned to take up the post of vice president in a unity government in April, under an accord to end a bloody civil war.
The UN Security Council held an emergency meeting behind closed doors Sunday evening to discuss the situation.
The violence began Friday when brief but heavy exchanges of fire left 150 soldiers dead on both sides, according to officials. Local media gave a higher toll of around 270 killed.
Sunday's clashes began on the western outskirts of the city, where Machar's forces and government soldiers both have bases, and then spread to other areas.
There were no immediate details of casualties from Sunday's fighting.
Several parts of the city were engulfed by the violence, including Gudele -- where Machar is headquartered -- and central Tongping near the international airport, with gunfire intensifying and subsiding at different times.
South Sudan's information minister Michael Makuei blamed the former rebels for the violence and insisted Sunday afternoon the government was "in full control of Juba".
Regional leaders, including from Kenya and Sudan, urged an end to the fighting and plan to hold a special summit in Nairobi on Monday.
UN Secretary-General Ban Ki-moon said he was "shocked and appalled" at the resumption in fighting and urged both sides to halt the violence.
Speaking ahead of the Security Council meeting, France's UN Ambassador Francois Delattre blamed the situation on "a lack of political will on the side of the parties" to the conflict.
"The key word is pressure, to urge the parties to take their responsibilities," he said.
Human Rights Watch in a statement said the Security Council had "for too long... relied on the goodwill of South Sudan's leaders, neglected accountability and brandished empty threats of an arms embargo and individual sanctions" and called for it to "finally" ban arms sales to the country.
The violence comes a day after the world's youngest country marked its fifth independence anniversary, and is a fresh blow to the peace deal that has failed to end the civil war that broke out in December 2013.
City residents hunkered down or began fleeing their homes as the UN reported the use of mortars, rocket-propelled grenades and "heavy ground assault weaponry". Helicopter gunships and tanks were also deployed during the course of the day.
Makuei said President Salva Kiir would call for a ceasefire.
"We are expecting his excellency the president will issue a unilateral ceasefire, binding on his forces. We hope the First Vice President Riek Machar will follow suit," he said.
Aid workers said a UN camp housing around 28,000 people previously uprooted by the war had been caught in the crossfire, wounding some civilians.
A steady stream of people clutching children and possessions headed for the hoped-for refuge of another UN base close to the city's airport, only to find fighting erupting there as well. There were also reports of hundreds of South Sudanese crossing into neighbouring Uganda.
The US embassy in Juba warned its citizens to stay indoors.
"The situation in Juba has significantly deteriorated. There is serious ongoing fighting between government and opposition forces, including near the airport, UNMISS locations, Jebel and elsewhere throughout Juba," the embassy posted on its Facebook page.
Airline Kenya Airways suspended flights to Juba on Sunday, citing the "uncertain security situation".
South Sudan has seen more fighting than peace since independence in July 2011, with a civil war breaking out at the end of 2013 when Kiir accused his sacked deputy Machar of plotting a coup.
An August 2015 peace deal was supposed to end the conflict but fighting has continued despite the establishment of a unity government.
Tens of thousands have died in the violence, close to three million have been forced from their homes and nearly five million survive on emergency food rations.
The humanitarian crisis has unfolded alongside an economic one with the currency collapsing and inflation spiralling out of control. The country's mainstay oil industry is in tatters and regional towns have been razed.
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