Police said they had surrounded the Westgate mall, which is popular with wealthy Kenyans and expatriates, and urged residents to stay away from the area.
The motive of the attack was not immediately clear, but Kenyan media said the attackers may have been either armed robbers or "terrorists".
AFP reporters at the scene said the surrounding area had been sealed off.
"There's an incident at Westgate and we're urging the public to keep off the area," Inspector General of Police David Kimaiyo said.
"Our officers are on the ground carrying out an evacuation of those inside as they search for the attackers who are said to be inside," he said.
"The attackers have so far injured four people. We will provide you with regular updates as we try to save the situation."
Another police official said: "Officers are approaching the situation with caution because there are innocent civilians inside."
"We have managed to evacuate some people to safety. We urge Kenyans to avoid the area as we pursue the thugs," Kenya's Interior Ministry said on Twitter.
"We have dispatched air surveillance and we confirm that they are armed criminals. We want to know who they are," said Internal Security Principal Secretary Mutea Iringo.
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