Tel Aviv police commander Ami Eshed said a manhunt was underway to find the shooter.
The number of people injured was not immediately clear. Speaking on Israeli TV channel, Eshed gave the number more than a dozen.
An Israeli police commander said the attack took place at a bar on Dizengoff Street, a popular downtown dining area.
Journalist Lauren Izso, who was on the scene shortly after the attack, estimated that hundreds of police officers were involved in securing the area and searching for the shooter.
Speaking on Israeli TV, Tel Aviv mayor Ron Huldai told city dwellers to stay at home.
Emergency services spokesman Magen David Adom said the two dead were men in their 30s.
Tel Aviv’s Ichilov Hospital, where most of the casualties were, said doctors were fighting to save the lives of four wounded.
The shooting is the latest in a string of violence that has left Israel and the Palestinian territories in peril.
In just one week of March, 11 people were killed in three attacks in Israeli towns and cities. This is the deadliest week Israel has seen in years and after weeks of heightened tension saw Israelis targeted in stabbing attacks and several Palestinians being killed by Israeli troops. shot dead on the West Coast.
It is unclear whether Thursday’s shooting is related to the recent violence.
Militant groups in Gaza and the West Bank hailed Thursday’s attack, though they stopped short of claiming responsibility.
Hamas called it a heroic campaign, while Jihad declared “the resistance will continue.”
Condemning the attack, the United Nations Special Coordinator for the Middle East Tor Wennesland pointed to Hamas in a tweet, saying, “Thanks for the acclaim of this attack by Hamas; no glory There’s nothing like terrorism. These attacks must stop now and be condemned by all.”
CNN’s Abeer Salman, Ibrahim Dahman, Andrew Carey and Hadas Gold contributed to this report.
