Police spokesman Hassan Nassir Ali said the attack took place last evening as the restaurant bustled with patrons breaking their Ramadan fast on the semi-autonomous, predominantly Muslim archipelago off the coast of Tanzania.
"The attacker, aged between 20 and 25, entered into the restaurant and stabbed the people before running away," he said, adding that investigations indicated the suspect "has a mental disorder, caused by use of drugs."
"We are still hunting for the suspect before we can give details. We do not think it is related to terrorism, but it is bad for our tourism industry," said Ali.
"After the attack which caused panic in the restaurant, the attacker also stabbed two other people while running away," said Hassan.
The police spokesman said the injured included a Canadian man who was injured around his mouth, two German women aged 20 and 24 who both sustained head injuries and a 66-year-old French woman who had a stab wound near her eye.
The injuries of the two Tanzanians were not detailed.
Zanzibar has experienced sectarian and political tensions in recent years -- including grenade explosions -- with the unrest affecting the key tourism industry.
In 2013 two British tourists and a Catholic priest were doused with acid in a series of attacks blamed on radical Islamists with ties to Somalia's Al-Shabaab, as the archipelago sees rising radicalisation.
Tourism is the main foreign currency earner for Zanzibar, famed for its white-sand beaches and historical buildings in Stone Town, listed as a world heritage site by UNESCO.
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