Kabul's Intercontinental hotel is under attack by at least three gunmen with a number of people taken hostage, according to local reports.
There was no immediate official information on casualties and no group has yet claimed responsibility, but the attackers appear to have been wearing suicide belts, according to interior ministry spokesman Najib Danish.
He said the gunmen were exchanging fire with special security forces at the luxury hotel which sits at the top of a hill and is heavily protected following attacks on other public buildings.
Eyewitness accounts claim that part of the hotel - believed to be the kitchen - was on fire with unconfirmed reports of guests being thrown from or jumping out of windows as attackers shouted "Alluhah akbar!"
Afghan news agency TOLO reported that police sources confirmed that hostages had been taken after the attack began around 9pm local time.
Hotel manager Ahmad Haris Nayab, who escaped unhurt, said the attackers had gained entry through the kitchen and people were fleeing amid bursts of gunfire on all sides, but he had no information on casualties.
Nasrat Rahimi, a deputy spokesman for the Interior Ministry, said there were four attackers. He said at least one was killed by Afghan security forces and three others are still battling the forces from inside the hotel, he added.
A guest hiding in a room said they could hear gunfire, telling AFP news agency: "I beg the security forces to rescue us as soon as possible before they reach and kill us."
The state-owned hotel is used for events including conferences attended by government officials and is one of two main high-end hotels in Kabul. While it shares the same name, it is not the same hotel as the one where 21 people died after a 2011 siege.
Security forces are reported to have cleared the ground floor of the hotel, but the attackers are still on the higher levels, with an official from the Afghan spy agency telling AFP the gunmen were "shooting at guests", believed to include around 100 IT managers and engineers attending an IT conference.
Although the NATO-led Resolute Support mission claims the Taliban has come under pressure after the United States increased military assistance to Afghan security forces and stepped up air strikes against the insurgents, security remains precarious.
Just days ago, the US Embassy in Kabul issued a warning of possible attacks on hotels in the capital.
Isis has claimed responsibility for the majority of the recent attacks in Kabul, but authorities suspect the Taliban-affiliated Haqqani Network has been involved in some of the assaults.
The increasingly popular Isis tactic of inghimasi involves wearing suicide vests which do not detonate until automatic weapons have been fully discharged, allowing terrorists to inflict maximum destruction.
Security has been ramped up in Kabul since last May, when a huge truck bomb left at least 150 people dead. Attacks have continued, however, with a bomb at a Shia cultural centre last month killing more than 40 people.
