Reports reaching Kenyans.co.ke are that there was a loud bang in Westlands that was followed by sporadic shooting.
An eyewitness claimed he saw armed men enter and hurl a grenade at the guards then started shooting.
The incident took place at 14 Riverside Drive at the building housing Dusit D2 Hotel and police officers are responding to the calls for help.
People hiding inside the buildings are reporting incessant shooting with many taking to social media to say they are holed up in several of the adjacent buildings.
Live images from mainstream media show cars burning and people running all over for safety.
Police Spokesman Charles Owino told journalists that the area has been cordoned off.
Director of Criminal of Criminal Investigations George Kinoti is also on the scene.
Firefighters are trying to put out the burning vehicles and citizens in the adjacent buildings are being evacuated.
A team from the Kenya Airforce is conducting aerial surveillance.
One person has been declared dead as gunshots are yet to subside.
"Several hostages have been held in Dusit hotel and we are waiting for back up," an officer told The Star
VIDEO: Entrance into Dusit as seen by @FerdyOmondi @BBCAfrica. Developing. pic.twitter.com/RRGKkLJ9zI
Explosion around or near #dusitd2 pic.twitter.com/Lc21Tl7yxz
