Earlier, the Britain-based group had reported clashes between Kurds and Al-Nusra Front, the Islamic State of Iraq and the Levant and other groups.
Ras al-Ain has a majority Kurdish population and is of strategic importance because of its location close to Turkey.
Kurdish fighters are trying to ensure that neither the regime of President Bashar al-Assad nor the opposition takes control of the area.
The clashes between Kurdish fighters and jihadists erupted after Al-Nusra Front attacked a convoy of Kurdish women fighters, Abdel Rahman said.
Nine jihadists and two Kurdish fighters have been killed since the fighting broke out, the Observatory said.
Activists in Ras al-Ain said members of the jihadist groups had taken advantage of the Muslim fasting month of Ramadan, which began last week, to try to impose their extreme version of Islam.
In the early days of the Syria conflict, when opponents of Assad's regime were desperate for help from any quarter, jihadist fighters were welcomed but a spate of abuses has fuelled a major backlash.
Charles Lister, an analyst at IHS Jane's Terrorism and Insurgency Centre, pointed out that tensions between Kurdish fighters and Islamist rebels go back months, and have persisted despite a series of ceasefires.
Other fighters perceive the Kurds as "interested only with Kurdish interests, rather than those of Syria or of Islam," he said.
Additionally, "the predominance of more liberal values -- in terms of lifestyle, appearance, and culture -- make Kurds a typical target of Islamist derision".
He said the Ras al-Ain clashes "emphasise the potential for damaging distractions to emerge for Syria's anti-government opposition".
Elsewhere in Syria, a child and six men were killed when a car bomb attack hit Kanaker in Damascus province, said the Observatory.
In the north of the capital, troops renewed their shelling campaign of rebel areas in Barzeh, while clashes also raged there, the group added.
It said a child was killed and five other people wounded by mortar fire of the Mazzeh district in southwest Damascus. Three children were among the wounded, the group said.
Rebels have been unable to seize areas of central Damascus, but have regularly targeted neighbourhoods of the capital from rear bases, where the army has been battling to dislodge them.
And in the central city of Homs, an army onslaught aimed at taking back rebel districts was in its 18th day, activists said.
Troops began a new attempt to break into the rebel area of Bab Hud, which like other districts of Homs has been under tight army siege for more than a year, Homs-based activist Yazan told AFP via the Internet.
Meanwhile, "the humanitarian situation continues to deteriorate day after day because of the suffocating siege", he said.
The lack of medical equipment in flashpoint areas means "there is a growing need to evacuate dozens of wounded, who urgently need operations that cannot be performed here", Yazan added.
More than 100,000 people have been killed in Syria's 28-month war, the Observatory estimates.
Wednesday's violence comes a day after at least 112 people were killed across the country, the group added.