Iraqi security forces have stormed the Jawahir Mall in Kirkuk in an armed operation aimed at wresting control of the shopping centre from a group of armed men.
AFP reported that gunmen, some of them wearing suicide vests, stormed the centre, took shoppers hostage, and moved up the five-storey complex to the roof, from where they opened fire on security personnel before Iraqi forces were able to take control of the situation.
One armed fighter was captured alive early on Thursday as the security forces brought the situation under control.
Authorities have said that at least two men with suicide vests are still at large.
Dozens of casualties have been reported, but exact figures are not clear at this time.
The local governor, Najmaldin Karim said the police are searching for the remaining hostage-takers.
"We knew that the terrorists were planning an attack. I told the security forces not to be deceived with how quiet it has been here in Kirkuk for the past few months.
"A terrorist situation like this was inevitable and nothing can stop their deviant attacks. We are working together to investigate this situation and have rescued eleven people.
"They're now with their families."
Mall in flames
A number of people were killed in the attack, sources say, after gunmen stormed the shopping mall, taking an unknown number of people hostage.
Footage has been released by Kurdistan TV showing the raid. Al Jazeera can not independently verify this report.
The shopping centre was in flames.
A suicide bomber detonated his explosive device inside the building, witnesses said.
"This is a very bold attack, the has been violence going on for about ten hours now," said an Al Jazeera source who could not be named for security reasons.
"This is a very difficult situation. Some local sources are saying that 25 people have died, but others say it is much higher."
The violence started earlier on Wednesday when the main security headquarters in Kirkuk was attacked, killing at least four people.
Police said a car bomb exploded at the gates of the Police Intelligence Department and later a suicide bomber entered the building and detonated his explosive device among police personnel.
The coordinated attack on the shopping complex came amid a surge in unrest that has claimed more than 6,200 lives this year.
Officials have blamed a resurgent al-Qaeda emboldened by the civil war in neighbouring Syria, but the government has faced criticism for not doing enough to address the concerns of Iraq's Sunni minority.
Correction: This story originally named the Kirkuk governor as Negm El Deem Omar.