Two gunmen opened fire on Wednesday evening in a bustling area in a central Tel Aviv nightlife area, killing at least three people and injuring some six others before being shot, police said.
The three people who died were were pronounced dead at a hospital after efforts to resuscitate them failed, hospital and police officials said. Several of the six injured victims were in life-threatening condition.
The two gunmen, overpowered and shot, were also being treated in Tel Aviv's central Icholov hospital, police spokeswoman Luba Samri said.
She said the shooting appeared to be a terrorist attack.
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.
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.
Witnesses said one of the gunmen was overpowered when he ran out of ammunition.
An eyewitness named Salma, who gave only her first name, told Israel's Channel 2 television that the shooter stood right next to her, dressed in dark clothing.
Footage aired on the television channel showed a policeman firing at one of the shooters as bystanders screamed in panic.
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.
Sirens sounded in the city centre as police and rescue forces rushed to the scene.
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.