Gunshots were fired in the vicinity of the Marhaba Sousse Hotel, which is popular with Irish holidaymakers.
It is understood that one gunman entered the hotel at around noon and opened fire.
Sources at the scene say the body of a gunman armed with a Kalashnikov assault rifle lay where police had shot him dead.
Local radio say two hotels were attacked following which police moved tourists and locals to a safe area.
The Department of Foreign Affairs is liaising with Irish diplomatic staff in the region.
Tunisia has been on high alert since March when the Bardo museum was attacked by Islamic extremists who killed several tourists.
