A priest was killed on Tuesday when men armed with knives seized hostages at a church near the northern French city of Rouen, a police source said.
Police said they killed two hostage-takers in the attack in the Normandy town of Saint-Etienne-du-Rouvray, 125 kilometers (77 miles) north of Paris.
A priest was killed and another hostage was “between life and death”, the interior ministry said.
The motivations for the hostage-taking were not yet clear, but the Paris prosecutor’s office said the case had been handed to anti-terrorism judges for investigation.
The incident comes as France remains on high alert nearly two weeks after Tunisian Mohamed Lahouaiej Bouhlel plowed a truck into a crowd of people celebrating Bastille Day in the French Riviera city of Nice, killing 84 people and injuring over 300.
French President Francois Hollande, who is from Rouen, and Interior Minister Bernard Cazeneuve were on their way to the scene, their offices said.
Footage showed several emergency vehicles at the scene and the streets sealed off.