Two gunmen opened fire on Wednesday evening in a bustling area in a central Tel Aviv nightlife area, killing four people and injuring some five others before being shot, police said.
Four victims died of their gunshot wounds in the emergency room, said Gil Fire, the deputy director of Tel Aviv's central Ichilov hospital.
Three others of the six injured victims also had life-threatening gunshot wounds, but doctors managed to stabilize them, he said.
One of the shooters was shot by police and was also being treated in the same hospital, while the second shooter was overpowered without being wounded and being interrogated, police spokeswoman Luba Samri said.
The two were Palestinians from the southern West Bank town of Yatta, she confirmed, adding they were cousins.
Ismail Haniya, the Gaza-based leader of the radical Islamist Hamas movement, retweeted a picture of what appeared to be the shooter who was shot, with the caption: "One of the heroes of the Tel Aviv operation."
The violence erupted on a warm evening in Tel Aviv's Sarona area that features outdoor entertainment, cafes and pedestrian areas, immediately next to the dpa Tel Aviv office.
Witnesses said the two gunmen, dressed in dark clothing, sat down in Sarona's Max Brenner cafe and ordered food, appearing regular customers. But they then pulled guns out of their bags and began shooting, first inside, then outside.
Footage from a surveillance camera showed people rushing in panic into another cafe.
A saleswoman at a clothing chain, Meital Ganon, said clients also ran into her store, shouting "terrorists! terrorists!"
"We shut the doors. People knocked on the doors to let them in and we opened them to let them in," she said, adding some of her clients fainted.
Other footage aired on Israel's Channel 2 television showed a policeman firing at one of the two shooters as bystanders screamed.
Israeli Prime Minister Benjamin Netanyahu, shortly after returning to Tel Aviv from a three-day trip to Moscow, held urgent consultations at the Israeli Defence Ministry's Tel Aviv headquarters just opposite the site where the shooting took place.
Tel Aviv Mayor Ron Huldai urged the public to remain calm.
"No terrorism will bring us down," he said.
The shooting happened days after more than 35,000 foreign tourists flocked to Tel Aviv for the city's annual gay parade Friday.
Israel and the Palestinian areas have suffered a wave of violence since October, including dozens of knife attacks launched by Palestinians protesting the ongoing occupation and perceived Israeli violations - denied by Israel - at a disputed Jerusalem holy site.
The violence however had appeared to have calmed down in the last weeks.
The last shooting in Tel Aviv took place on January 1 in the city's main Dizengoff artery. Two people sitting in a cafe and a driver whose taxi was used by the gunman to flee were killed. The shooter, from an Arab town in northern Israel, was found and shot in a standoff two weeks later.