Seventy people were abducted Friday from their village along the main road in the south and seven of them were found dead the following day alongside the highway, from the city of Kandahar to Tarinkot in Uruzgan province.
Around 30 people have been released while 30 others remain missing, Kandahar police spokesman Zia Durrani told AFP.
It remained unclear why the villagers were seized. But some officials said they suspected the Taliban had kidnapped or killed them for suspected cooperation with the Western-backed government which the terrorists are striving to topple.
The insurgents have a heavy presence in Uruzgan, a poppy-growing area.
On Sunday they denied involvement, while confirming they had attacked police checkpoints in the area.
"Our mujahideen killed a number of local police and pro-government militias there, also capturing 17 suspects who were later released after interrogation. We have not killed or kidnapped any civilians," the Taliban said in a statement.
Civilians are increasingly caught in the crosshairs of Afghanistan's worsening conflict as the Taliban step up their annual spring offensive launched in April.
Highways passing through insurgency-prone areas have become exceedingly dangerous, with the Taliban and other armed groups frequently kidnapping or killing travellers.
In July Taliban fighters closed a highway connecting Farah to Herat city in the west, stopping a bus and forcing 16 passengers off it. They shot at least seven of them while the remainder were taken hostage.
He said troops had retreated two kilometres from the centre of Kohistan district. There was no word on casualties.
Local media on Sunday also reported that the Taliban had overran Taywara district in the central province of Ghor, though there was no immediate official confirmation.
There has been a surge in fighting in several northern and southern Afghan provinces in recent days, including in Helmand in the south where 16 Afghan police officers were killed by a US air strike on Friday night.
The strike, the latest setback in Washington's efforts to pacify the country, hit a compound in Gereshk district, large parts of which are under Taliban control.
Afghan troops and police are battling largely alone on the ground against the insurgency, after US-led foreign forces withdrew from most combat operations in December 2014.
The United States is actively considering sending more troops to Afghanistan and US commanders there have requested thousands of extra soldiers on the ground.
The US contingent now numbers about 8,400, and there are another 5,000 from NATO allies, a far cry from the US presence of more than 100,000 six years ago. They mainly serve as trainers and advisers.