The Somalia-based extremist group al-Shabab is claiming responsibility for the attack on an upscale hotel complex in Nairobi and says its members are still fighting inside.
The al-Qaeda-linked group issued the claim via its radio arm, Andalus.
There were initial reports of possibly two blasts and heavy gunfire.
Witnesses and police at the scene are calling it a terror attack.
Kenya’s national police are on scene to engage the attackers.
The blast from the complex in Nairobi, which includes a large hotel known as DusitD2, banks and offices and house international companies, was heard from AFP’s offices some five kilometres three miles away.
Simon Crump, who works at one of the offices, said workers had barricaded themselves inside their offices after “several” explosions.
“We have no idea what is happening. Gunshots are coming from multiple directions,” he told AFP, adding that the people were terrified.
Several vehicles are burning and people are being rushed and carried from the scene.
Police spokesperson Charles Owino says that “we have sent officers to the scene, including from the anti-terrorism unit, but so far we have no more information.”
An AFP reporter on the scene said the gunmen and security forces were exchanging gunfire.
“There was a bomb, there is a lot of gunfire,” whispered another man working at the compound, asking not to be named.
“All police teams have been dispatched to the scene where the incident is. As at now we are treating it as anything, including the highest attack,” police spokesman Charles Owino said by phone.
“All police teams including anti-terror officers are at the scene,” he said.
Ambulances, security forces and firefighters have rushed to the scene, sirens wailing. A large group of women have been hurried out by security forces, one woman still in hair curlers.
What appears to be plainclothes security forces are seen inching their way toward the scene, guns in hand while helicopters can be heard. Other people appear to be taking cover behind fountains and other features in the lush outdoor complex.
An armored vehicle has arrived at the ongoing attack with police and army at the scene. Plainclothes police are going from shop to shop to clear out trapped civilians who are running away from the complex.
As a car bomb smolders outside the gate, sporadic gunfire can be heard coming from the complex.
The attack immediately reminds many Kenyans of the Westgate Mall attack in Nairobi in 2013, when al-Shabab extremists burst into the luxury shopping center, hurling grenades and starting a days-long siege that left 67 people dead.