Police and armed attackers exchanged fire in Dhaka's diplomatic zone in Friday, where an unknown number of people have been trapped in different locations.
Gulshan police station duty officer Sayedur Rahman said that the shooting was possibly underway at a restaurant or a hospital.
The Dhaka Tribune said at least 20 civilians had been taken hostage.
Several gunmen reportedly entered the Holey Artisan Bakery cafe and opened fire.
The cafe is described as being popular with expatriates, diplomats and middle-class families.
The U.S. Embassy in Dhaka warned of the situation on Twitter, advising people to shelter in place and noting that a hostage situation had been reported.
