A person has been stabbed to death after a knife-wielding man was shot by police in Melbourne's CBD.

One person has been stabbed to death on a central Melbourne street where a knife-wielding man was left in a critical condition after being shot by police.

Two other people are in hospital after being stabbed in a busy Bourke Street on Friday afternoon.

“Three people have been stabbed, unfortunately one is deceased at the scene, two other victims are currently in hospital,” police Superintendent David Clayton told reporters at the scene.

Photographs from Bourke Street show a white sheet covering a body, with a bare foot protruding.

One witness said a man was stabbed in the face.

Footage from the scene shows a man swinging a knife at two uniformed officers near a burning car before he was shot.

“(Officers) were confronted by a male brandishing a knife and threatening them,” Supt Clayton said.

“At the same time, passers-by were calling out that members of the public had been stabbed. Police shot the male in the chest and he is now in a critical condition under guard in hospital.”

Police are not looking for anyone else in relation to the events.

“There’s no known link to terrorism at this stage. We’ll keep an open mind as to whether there’s any link. It’s very early in the stages of the investigation,” Supt Clayton said.

Ambulance Victoria confirmed three people were injured.

“One person has been taken to hospital with a neck injury. They are in a suspected critical condition,” they said.

“A second person has been taken to hospital with a head injury. A third person has also been taken to hospital.”

Police initially responded to reports of a car on fire at the corner of Bourke and Swanston streets. The car burst into flames about 4.20pm on Friday and while the vehicle was quickly extinguished, reports soon followed of a knife attack.

Markel Villasin, 22, was finishing his shift at KFC on Bourke St as the drama unfolded.

“Me and the managers ran out and that’s when we saw the car on fire and then we saw the guy on the floor and we wanted to help, there were two blokes helping him out already, he was face down pools of blood around his face,” he told AAP.

“I’m pretty sure he got stabbed in the face.

“I really wanted to help but I was in shock, I didn’t know what to do.

“Because he was on his stomach, they turned him over to see if he’s alright, he was still alive.”

Bystander Drew Hair told AAP he was walking on Swanston Street when he heard an explosion.

The next thing he saw was a “big dude punching into the police car”.

Mr Hair said the assailant was dressed in Islamic clothing and of African appearance and about six foot four inches tall.

“The cops were trying to hit him with batons and he wasn’t going down,” he said.

Mr Hair said two civilians became involved as well as two police, trying to stop the man from his attack.

Witness Fiona told 3AW her friends had seen someone with a knife in the area and she’d been told he’d stabbed a security guard.


Another witness on a passing tram told ABC Radio it seemed police had been trying to subdue a man who was waving something.

“People around me screamed that he had a knife but I couldn’t see clearly from where I was,” Meegan May said.

“Then I heard a loud bang and someone said they could see someone doing chest compressions on someone as an ambulance started coming up the street as well.”

“There’s been an incident in the CBD near Bourke St. Details are still unclear – but please avoid the area and always follow the instructions of emergency services personnel,” Premier Daniel Andrews tweeted.

Victoria Police are asking people to avoid the area and have cordoned off streets.

“We will provide information as it comes to hand,” the force said in a statement.

They want to hear from people who witnessed the event or captured footage as they piece together what happened.

More to come.