Two Palestinian gunmen killed four people and wounded six others after opening fire at a popular open-air shopping and restaurant area of central Tel Aviv, Israeli authorities say.
The attacks took place in two locations in Sarona Market, close to Israel's defence ministry and main army HQ.
Police said the gunmen were from Yatta, a Palestinian village near the West Bank town of Hebron.
Both are in custody. One is undergoing surgery in hospital, police added.
There has been a rise in Palestinian attacks on Israelis since last year, with a series of shootings, stabbings and car rammings, although the number of incidents had dropped in recent months.
Prime Minister Benjamin Netanyahu, who visited the scene of the attack late on Wednesday, called it "a savage crime of murder and terrorism".
'Ran like lightning'
The attacks happened at around 21:30 (18:30 GMT) as people were relaxing in the market's restaurants and bars.
Video footage showed crowds running from the scene and ambulances arriving. Pictures showed upturned tables and chairs at one restaurant.
One woman told Israel's Channel 10 TV that she had been celebrating her son's birthday when she heard shots and "immediately understood it was a terror attack".
"We ran like lightning with the baby and the stroller," Meital Sassi said. "I yelled at people who didn't understand what was happening to run."
Ichilov hospital said four wounded people brought there had died and at least four others were in a critical condition.
Tel Aviv police chief Chico Edri called it a "pretty serious terrorist incident" but said fears of a third attacker were unfounded.
"Two terrorists arrived at the complex and while firing, and to our regret, nine people were injured to different degrees," he said.
"Of the two terrorists, one was arrested and the other wounded by gunfire. The weapons they were carrying have been seized."
The director of the market, Shlomi Hajaj, told Channel 10 that security guards at the entrance had "prevented the attackers from entering the facility, averting a bigger disaster as the compound was packed with people".
"I think a larger tragedy was avoided by the resolute action of citizens, of security people, police," said Mr Netanyahu.
"We're going to take the necessary steps to attack the attackers and defend those who need to be defended."