At least seven high-profile locations were hit in India's financial capital, including two luxury hotels where hostages were reported to be held.
A fire is sweeping through the Taj Mahal Palace, Mumbai's most famous hotel which is now ringed by troops.
Police said four suspected terrorists have been killed and nine arrested.
Flames and black smoke billow from the Taj Mahal Palace hotel, Mumbai
The situation is still confused but the main train station, a hospital, a restaurant and as well as the two hotels are among those places caught up in the violence.
There are reports of gunfire and explosions taking place elsewhere in the city.
Commandos have now surrounded the two hotels, the Taj Mahal Palace and the Oberoi Trident, where it is believed that the armed men are holding dozens of hostages.