Two attackers killed a priest with a blade in a church in a town in France’s Normandy region.
The attackers were shot dead by the police, reports said.
“At one point, the two assailants came out of the church and that's when they were killed by the BRI elite force," Interior Ministry spokesman Pierre-Henry Brandet told France Info radio, referring to France's specialized police group.
Their identity and motives of the attackers were not clear.
France's antiterrorist prosecution unit said it had taken over the investigation into the attack in the town of St.-Étienne-du-Rouvray.
French media reported that the attackers cut the throat of the priest. Another hostage was "between life and death", the French Interior Ministry said.
Another hostage was "between life and death", the Interior Ministry said.
French President Francois Hollande and Interior Minister Bernard Cazeneuve were on their way to the site of the attack.
The hostages included a priest, two nuns, and a few worshipers, according to reports by French media.
French Prime Minister Manuel Valls expressed his horror at what he called "a barbaric attack on a church."
"The whole of France and all Catholics are wounded. We will stand together," he wrote on Twitter.
The incident comes as France remains on high alert nearly two weeks after Tunisian Mohamed Lahouaiej Bouhlel mowed down a crowd of people celebrating Bastille Day in the southern city of Nice, killing 84.
The attack, the third major strike on France in 18 months, was claimed by the extremist group Islamic State (IS).
Based on reporting by Reuters, AFP and Le Monde