At around 4:20pm on Friday, police responded to reports of a car in flames on the corner of Bourke and Swanston street in the Melbourne CBD.
Police said in a statement that a man has been arrested and taken to hospital under police guard in a critical condition. Police are not looking for anybody else at this stage.
A small number of people are being treated for stab wounds, police said.
There are unconfirmed reports a man was shot by police at the scene. Several videos on social media, from a number of different angles, appear to show a man lunging at police before he is shot.
There are also photographs on Australian Associated Press of a body under a sheet at the scene.
Ambulance Victoria said in a statement that paramedics assessed three people at the scene: one with a neck injury in a suspected critical condition, one with a head injury with condition unknown, and a third person whose injuries and condition is unknown.
Trams and traffic along the street have ceased and a heavy emergency presence held people back as the incident unfolded. People have been warned to avoid the area.
Police have asked anybody with information or who witnessed the incident to go to Melbourne West Police Station to make a statement.
The incident comes during the Victorian Supreme Court trial of James Gargasoulas, who allegedly killed six people as he mowed down pedestrians along Bourke Street Mall in January 2017.
He has pleaded not guilty to six counts of murder and 27 counts of reckless conduct endangering life.
More to come.