The shooting took place on the central boulevard of Champs Elysees. The suspected attacker was also killed in the shootout, according to police.
Addressing the nation following a crisis meeting at the presidential palace, French President Francois Hollande said that all leads indicate that the attack was of a “terrorist nature.”
Hollande assured the public that “we will be absolutely vigilant” during the upcoming presidential election.
He announced that a security council will convene for a meeting at 8am on Friday, adding that “a national tribute” would be paid to the slain police officer.
Police are currently conducting raids in the area, the prosecutor’s office said, adding that they seek to establish whether the shooter had any accomplices.
Meanwhile, the French Interior Ministry confirmed that the life of the police officer, who was heavily injured during the attack, is no longer in danger.
"The identity of the attacker is known and has been checked. I will not give it because investigations with raids are ongoing. The investigators want to be sure whether he had or did not have accomplices”, Paris prosecutor Francois Molins told reporters.
The French Interior Ministry earlier confirmed in a Twitter post that the attacker targeted a police bus parked on the boulevard.
The gunman who killed the police officer was already known to law enforcement services, police confirmed without revealing the identity of the attacker.
A woman, reportedly a foreign citizen, has suffered minor injuries as result of the attack, Paris Prosecutor Francois Molins told BMF TV.
The police are searching the home of a suspected shooter in Chelles, a commune in the eastern suburbs of Paris some 20 km from its center, Le Parisien reported.
Islamic State (IS, formerly ISIS, ISIL) has claimed responsibility for the attack, AFP reported, citing the media agency Amaq, which is affiliated with the terrorist group. It also named Abu Yusuf al-Beljiki as the man behind the attack.
A large number of law enforcement have been deployed to the scene. A helicopter has been seen flying at a low altitude over central Paris. The local police department asked the people to “avoid the Champs Elysees district” and follow police instructions.
The French counter-terrorism office has opened an investigation into the incident, the Paris Prosecutor’s Office said. In the meantime, Reuters reports that the police raided the apartment of the attacker killed in the shootout, which is located to the east from Paris.
A bomb disposal team has been called in to inspect the vehicle of the assailant, the Interior Ministry said.
The French Interior Ministry dismissed earlier media reports about the death of the second police officer and confirmed that only one police officer was killed in the incident and the other two were seriously injured.
The shootout took place around 21:00 (local time) near the Franklin D. Roosevelt metro station in the 8th district of the French capital, the French RTL TV channel reports.
In the meantime, eyewitnesses told the local media that the assailant got out of a car and opened fire on the officers with a Kalashnikov assault rifle. This information was then partially confirmed by the Interior Minsitry spokesman, Pierre-Henry Brandet, who told journalists that "an automatic weapon was used against police, a weapon of war."
He also revealed some new details about the attack. "A man immediately got out and opened fire on the police car, fatally wounding a police officer ... He also wounded a second one, it would seem very seriously," he said, as cited by Reuters.
An unconfirmed Reuters report citing police sources earlier said that shots were fired at another location near the Champs Elysees boulevard.
The incident comes just days ahead of the first round of the French presidential elections, which is scheduled for April 23.
French presidential candidates have expressed their condolences over the incident.
Francois Fillon, a candidate from the Republicans, paid “homage to the security forces, who give their lives to protect ours.” Fillon has also called for Friday’s planned campaign events to be cancelled following the shooting
In the meantime, Marine le Pen from the National Front expressed her “solidarity with the [French] security forces, who are being targeted again.” Le Pen was preparing to postpone her presidential campaign events on Friday, according to AFP.
US President Donald Trump expressed his condolences to the French people over the incident, which he described as a “very, very terrible thing.”
"Our condolences to our country and the people of France... It looks like another terror attack," the US president said during a joint press conference with the Italian Prime Minister Paolo Gentiloni. "What can you say? It just never ends," he added.
The incident comes just two days after two men were detained in the French southern city of Marseille on suspicion of planning a "violent and imminent attack" ahead of the presidential elections. Guns and explosives were reportedly found during the search in their apartment. One of the suspects has recently converted to Islam, according to Soir media outlet.