Another person inside the church was seriously injured and is hovering between life and death, Interior Ministry spokesman Pierre-Henry Brandet said.
Police managed to rescue three people from the church in the small northwestern town of Saint-Etienne-du-Rouvray, Brandet said. The hostage-taking occurred during morning Mass, he told reporters.
The identities of the attackers and motive for the attack are unclear, according to a security official, who was not authorized to be publicly named.
French President Francois Hollande and Interior Minister Bernard Cazeneuve were heading to the town.
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Brandet, speaking on BFM TV, said the RAID special intervention force was searching the church and its perimeter for possible explosives and terrorism investigators had been summoned.
France is currently on high alert after an attack in Nice on Bastille Day July 14 that killed 84 people and a string of deadly attacks last year claimed by the Islamic State group that killed 147 others. France is also under a state of emergency and has extra police presence in the wake of the Nice attack in which a man barreled his truck down the city's famed Promenade des Anglais, mowing down holiday crowds.
In April 2015, an Algerian student who was arrested after shooting himself in the leg was found with heavy weapons, bulletproof vests and documents linked to Islamic State. He is charged with killing a young woman inside her car the same day.
According to French authorities, the suspect, Sid Ahmed Ghlam, was sent by the Belgian Abdelhamid Abaaoud to attack a church in Villejuif, just outside of Paris.
A cell directed by Abaaoud later carried out the Nov. 13 attacks in Paris that left 130 people dead and the March 22 attacks in Brussels that killed 32 people.