Egypt has demolished more than 3,255 homes and other buildings in the Sinai peninsula in violation of international law, Human Rights Watch says.
Troops began razing homes along the Gaza border in 2013 to create a "buffer zone" and eliminate smuggling tunnels, after a surge in attacks by militants.
But those evicted are given little or no warning, no temporary housing and inadequate compensation, HRW alleges.
The Egyptian government insisted that residents supported the demolitions.
Jihadist groups based in North Sinai, including an affiliate of so-called Islamic State (IS), stepped up their attacks after the military overthrew Islamist President Mohammed Morsi in July 2013.
More than 3,600 civilians, security personnel and militants have been killed in the ensuing violence - more than two-thirds of them since the government announced plans for the buffer zone in October 2014 - HRW cited media reports and official statements as saying.
So far, the military has destroyed nearly all buildings and farmland within about 1km (0.6 miles) of the Gaza border using uncontrolled explosives and earth-moving equipment, according to analysis of satellite imagery, videos and interviews with residents by HRW detailed in a report released on Tuesday.
The military aims to eventually clear an area of about 79 sq km (30 sq miles) along the Gaza border, including all of the town of Rafah, which has a population of about 78,000 people, HRW says.
The government says the operation will allow the military to close smuggling tunnels it alleges are used by jihadists to receive weapons, fighters and logistical help from Palestinian militants in Gaza.
But HRW said little or no evidence had been offered to support this justification, citing statements from Egyptian and Israeli officials that suggested weapons were more likely to have been obtained from Libya or captured from the Egyptian military.
HRW also said the authorities had provided residents with little or no warning of the evictions, no temporary housing, mostly inadequate compensation for their destroyed homes - none at all for their farmland - and no effective way to challenge official decisions.
It concluded that such actions violated protections for forcibly evicted residents laid out in UN and African conventions to which Egypt is a party, and might also have violated the laws of war.
HRW said the government had also failed to explain why troops had not used sophisticated tunnel-detecting equipment, for which they have reportedly received training from the US, to find and eliminate tunnels without destroying people's homes.
"Destroying homes, neighbourhoods, and livelihoods is a textbook example of how to lose a counterinsurgency campaign," said Sarah Leah Whitson, HRW's Middle East and North Africa director.
The Egyptian government said it had complied with "recognised international human rights laws and standards to guarantee the protection of the lives and property of citizens and to limit their suffering from adverse living conditions".
"All measures were taken in consultation and co-ordination with the local residents, who are aware and convinced of the importance of their participation in the protection of Egypt's national security and contribution to eliminating transnational terrorism," it added.