Governor Vasip Sahin said the attacker, armed with a long-barreled weapon, killed a policeman and a civilian outside the club at around 1:45 am (local time) today before entering and firing on people partying inside. He did not say who may have carried out the attack.
"Unfortunately (he) rained bullets in a very cruel and merciless way on innocent people who were there to celebrate New Year's and have fun," Sahin told reporters.
Some customers jumped into the waters of the Bosporus to escape the attack, the report said. NTV television said some of the wounded were foreign nationals, without citing their nationalities.
The whereabouts of the assailant was not known and it was not clear if he had been caught.
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Sinem Uyanik was inside the club with her husband who was wounded in the attack.
"Before I could understand what was happening, my husband fell on top me," she saidoutside Istanbul's Sisli Etfal Hospital. "I had to lift several bodiesfrom top of me before I could get out. It was frightening." Her husband was not in serious condition despite sustaining three wounds.
The White House condemned what it called a "horrific terrorist attack" and offered US help to Turkey.
White House spokesman Eric Schultz said President Barack Obama was briefed on the attack by his national security team and asked to be updated as the situation developed. Obama is vacationing in Hawaii this week with his family.
National Security Council spokesman Ned Price said the attack on "innocent revelers" celebrating New Year's shows the attackers' savagery.