Four gunmen attacked Kabul's Intercontinental Hotel on Saturday and started shooting at guests, an Afghan official said, in the latest violence to strike the Afghan capital.
According to one witness, who did not want to be quoted by name, the attackers took some hotel staff and guests hostage.
Hotel manager Ahmad Haris Nayab, who escaped unhurt, said the attackers had got into the main part of the hotel through a kitchen and people tried to get out amid bursts of gunfire.
A National Directorate of Security (NDS) official said: "Four attackers are inside the building".
Another official said the attackers were armed with small weapons and rocket-propelled grenades when they entered the hotel, which often hosts weddings, conferences and political gatherings.
No-one has immediately claimed responsibility for the attack, and there is no immediate word on casualties.
According to interior ministry spokesman Najib Danish police have cordoned off the area and are trying to bring the situation under control.
In 2014, nine people, including children, were killed during a Taliban attack on Kabul's Serena Hotel.
Special forces were being lowered by helicopters onto the rooftop of the state-owned hotel, he added.
Security at the Intercontinental, which is not part of the global InterContinental chain, is relatively lax compared with other luxury hotels in Kabul.
Security forces stand guard near the Intercontinental Hotel after a deadly attack in Kabul, Afghanistan, on Saturday. The Department said it had received reports of "extremist groups" planning a hotel attack in the capital, "such as [on] the Hotel Baron near Hamid Karzai Int'l Airport".