"We currently have three deceased and at least 20 people injured," according to Victoria Police.
The incident appears to be connected to a stabbing incident which happened earlier in a Windsor suburb.
"The exact circumstances surrounding the events are still being determined and we will provide further information when it comes to hand," a police spokeswoman said.
Media reports said that paramedics were assessing 20 people after the incident that happened at around 2 pm (local time) and police arrested a man.
Also Read
According to reports, the incident took place during a police pursuit which began in the suburbs, and ended in the CBD.
"At this early stage it is believed a man driving a vehicle has struck a number of pedestrians in the vicinity of Bourke and Queens Streets just before 2pm," a Victorian police spokesperson said.
Former Victoria Police commissioner Christine Nixon, who was present at the scenem, said one of the injured was a toddler, who appeared to get thrown out of a pram.
"I turned around and saw the car. He was probably about a metre from me, I stepped back [from the road] and he continued down Bourke Street on the footpath, with people chasing him. There were a number of people on the ground, many bystanders went to help," she said.
Armed police wearing bullet-proof vests and helmets were scene moving through the area, along with uniformed and plain-clothed officers.
There have also been reports of people hearing gunshots, the report said, addinga major police operation was underway.
Disclaimer: No Business Standard Journalist was involved in creation of this content