An armed driver who slammed a car into a police van has been shot dead, authorities in France said.
France's Interior Ministry confirmed emergency services are dealing with a "security incident" at the world-famous Champs-Élysées.
Paris police on Monday said they are "in control" after armed police stormed the shopping district in the city centre.
Witnesses say a police van was hit by another vehicle which was the on fire sparking the major response.
"It looks like this was a deliberate act," Interior Ministry Spokesman Pierre-Henry Brandet told reporters at the scene.
The Paris prosecutor's counter-terrorism unit said it had opened an investigation into the incident, which occurred only a short walk away from the Elysees presidential palace and the US embassy.
Brandet said it was very likely that the driver, who had been armed, was dead.
A police bomb squad is also present.
One witness, who was just 20 metres from the scene, said: “Large bangs followed by what sounded like shots fired near a car with smoke coming out of it on Champs Elysees.”
Armed officers have been pictured surrounding a police cordon after reports of a man on the ground.
Some reports suggest he was dragged from the car.
An image has now appeared of a bloodied man lying face down on the floor, while the body is searched by a bomb robot.
Police in Paris are asking people to stay clear of the area.