Two police officers arrive nearly instantly to find a blue utility vehicle ablaze, with flames shooting high into the air.
Multiple videos posted to social media showed a man carrying a knife and running at police, who had batons, guns and tasers drawn.
Australians are loving the man who stopped the Bourke Street attacker in Melbourne using only a shopping cart.
The officers were immediately confronted by a man brandishing a knife and threatening them.
The attack during the afternoon rush hour brought the centre of Australia's second largest city to a standstill.
"At the same time passers-by were calling out that members of the public had been stabbed", Superintendent Clayton said.
Moments after a ute went up in flames at about 4.20pm on Friday, police shot the man as he swiped at officers with a knife.
Markel Villasin, 22, was finishing his shift at KFC on Bourke St as the drama unfolded.
Paramedics said they assessed three people at the scene, one with a neck injury: "They are in a suspected critical condition".
"A small number of people are being treated for stab wounds", the statement said. Hundreds of people watched from behind barricades as police tried to apprehend the attacker. One of the victims also died, while the two others were hospitalized. "He is someone who is accordingly known to Victoria Police and the federal intelligence agencies", he said.
Ashton declined to identify the attacker but said he was from Somalia and known to police. "We will keep an open mind as to whether there is any link".
"Police shot the male in the chest and he is now in a critical condition under guard in hospital".
"For operational matters we now have the counter-terrorism command and the homicide squad dealing with this matter, and there are ongoing investigations being conducted by the counter-terrorism command", he continued.
According to Australian police, the attack is likely linked to terrorism, reported AP. And that the area has been cordoned off.
Police were responding to reports a vehicle was on fire.
Memories remain fresh of a fatal but not terror-related attack on the same street a year ago, in which a man drove his auto at pedestrians at high speed, killing six people and wounding about 30.