Several shots have been fired inside and outside the nation's parliament in Ottawa, leaving one soldier wounded.
A gunman fired at the National War Memorial and then ran into parliament nearby, continuing the attack.
Canadian broadcaster CBC and several MPs report that one gunman has been killed but that is unconfirmed.
The incident came hours after Canada raised its terror threat level following a fatal hit-and-run attack on two soldiers earlier in the week.
"Shots fired at War Memorial at 9:52am today; one person injured," Ottawa Police tweeted on Wednesday as a witness reported seeing authorities search from room to room for the suspect.
Police have told those in the vicinity to stay away from windows and roofs as they search for additional suspects.
One gunman - said to be carrying a rifle - fired on soldiers guarding Canada's main war memorial and then ran into the parliament.
"The indications are there is more than one gunman. There may be several," Canadian MP Marc Garneau told the BBC, adding he and fellow politicians were evacuated from the area.
There are no reports yet of anyone inside the building being hurt.
Earlier, Ottawa Police told the BBC there could be more than one shooter.
Meanwhile, Prime Minister Stephen Harper "is safe and has left Parliament Hill", his director of communications wrote on Twitter.
Emergency staff tended to the injured at the memorial
The shooting began at the Ottawa War Memorial
Senior government member Tony Clement said on Twitter shots were fired near an in-progress cabinet meeting in parliament.
A government official earlier said the raised threat level was in response to an increase in online "general chatter" from radical groups including Islamic State and al-Qaeda.
Ministry spokesman Jean-Christophe de Le Rue said on Tuesday that the increased level "means that intelligence has indicated that an individual or group within Canada or abroad has the intent and capability to commit an act of terrorism".
On Tuesday a Muslim convert was killed by Quebec police after deliberately hitting two soldiers in his car, killing one and injuring another.
A minister said it was a "terrible act of violence against our country".
Earlier this month, Canada announced plans to join the US-led campaign of air strikes against Islamic State (IS) militants in Iraq.