Belgian prosecutors said the attacker yelled "Allahu akbar" (God is greatest) during the assault before being shot by a soldier in the centre of city which has been on high alert since last year's carnage at the airport and on the metro.
Overnight, police raided the suspect's home in Bruges, northwest Belgium, with federal prosecutors opening an investigation into "attempted terrorist murder", a statement said.
"The man was hit and died shortly afterwards in hospital from his wounds," the prosecutors' statement said. As well as the knife, police found a replica gun and two copies of the Koran on him.
The assailant was a Belgian national of Somali origin who was born in 1987, authorities confirmed. He arrived in the country in 2004 and was granted Belgian nationality in 2015.
Less than two hours later, two British police officers were slightly injured while arresting a man with a large knife outside Buckingham Palace in London.
The 26-year-old attacker, who was initially detained on suspicion of causing grievous bodily harm and assaulting police, was later arrested under the Terrorism Act 2000.
"Detectives from the Metropolitan Police's Counter Terrorism Command are now investigating the incident," police said.
The queen was at her Balmoral residence in Scotland at the time.
The incidents follow vehicle attacks in Spain last week which killed 15 people and were claimed by the Islamic State group, and another stabbing spree in Finland which left two dead and eight wounded.
One of the two soldiers targeted in Brussels was "slightly" wounded, the prosecutors said.
"All our support for our military," tweeted Belgian Prime Minister Charles Michel, saying the situation was being closely monitored.
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