The Islamic State has claimed responsibility for the Paris shooting which has left one police officer dead and two seriously injured.
Police were fired on by a lone gunman with an AK-47 after investigating a suspicious package near the Franklin D Roosevelt Metro station and the Marks and Spencer store on the Champs-Elysées shortly after 8.30pm, Thursday local time.
The gunman was then killed by police. At least one bystander is believed to have been injured in the attack.
"A little after 9pm a vehicle stopped alongside a police car which was parked," a French Interior Ministry spokesman explained.
"Immediately a man got out and fired on the police vehicle, mortally wounding a police officer."
Police identified the attacker as a 39-year-old from a suburb in the east of Paris.
The Islamic State group, which is being driven out of its areas of territorial control in Iraq and Syria by Western-backed coalitions and has hundreds of French-speaking fighters, claimed responsibility for the shooting via its Amaq news agency, naming the attacker as Abu Yousif al-Belgiki.
France has lived under a state of emergency since 2015 and has suffered a spate of Islamist militant attacks mostly perpetrated by young men who grew up in France and Belgium and that have killed more than 230 people in the past two years.
The wide avenue that leads away from the Arc de Triomphe had been crowded with Parisians and tourists enjoying a spring evening, but police quickly cleared the area, which remained empty well into the night of all but heavily armed security forces and police vehicles.
Witness Chelloug, a kitchen assistant, said he was walking out of a shop and saw a man get out of a car and open fire with a rifle on a policeman.
"The policeman fell down. I heard six shots, I was afraid. I have a two year-old girl and I thought I was going to die... He shot straight at the police officer."
The shooting comes just three days before the French election. Some of the candidates have clashed over whether official campaigning, which has just one more day to run, should be brought to a full stop in light of the incident.
Smarttraveller.gov.au has warned Australians travelling to France to "exercise a high degree of caution" following the attack.
Earlier, Prime Minister Malcolm Turnbull said his thoughts were with the French police and advised Australians travelling overseas to stay well-informed.
"Our prayers are with the family of the police officer who has been killed," he said.
"Every Australian should pay attention to the travel advisories on the website."
"Pay close attention to your surroundings, be alert, but above all, follow the travel advisory, because it is updated all the time."
A Paris prosecutor said the gunman has been identified, but they are still assessing whether he had accomplices.
Police officials say they are now searching at least one location in the eastern Paris suburbs in relation to the attack.
French President Francois Hollande earlier said it is most likely terrorists were responsible.
The president praised police and security service and expressed "immense sadness" over the attack.
"We shall be of the utmost vigilance, especially in relation to the election," he said.
A French government spokesman says the Paris assailant used a "war weapon" to fire on officers.
Officials say the suspect in the attack on Paris police officers was previously flagged as an extremist, AP has reported.
France's counter-terrorism office has opened an investigation into the shooting, the prosecutor's office said.
French Interior Ministry spokesman Pierre-Henry Brandet said police were deliberately targeted in the shooting.
Earlier France police union Alliance's Yvan Assioma said his thoughts were with the family of the dead policeman.