At least 27 people, mostly foreigners, have been killed in an attack on a beach near two tourist hotels in the Tunisian resort town of Sousse, according to the interior ministry.
Officials say one gunman has been shot dead and another is being pursued.
Sousse is a popular tourist destination.
Tunisia has been on high alert since March when militants killed 22 people, mainly foreign tourists, in an attack on a museum in the capital Tunis.
Officials say six people have been injured in the attack.
Local media reported that the second attacker had been arrested, but this has not been confirmed. A photo showing the body of the first attacker is circulating on social media.
A British man on holiday told the BBC that he heard the attack on a neighbouring hotel.
From his room, he saw a man with a pistol but did not know whether this was an attacker or a member of the security forces.
The attack happened at a beach near the Hotel Imperial Marhaba, officials said.
Briton Glenn Leathley told the BBC his daughter had been at the scene and rang him to say “there’s gunfire on the beach”.
Another British holidaymaker, Steve Johnson, told the BBC: “We were just laying on the beach as usual and… we heard what we thought at first was fireworks.
“But it was soon pretty obvious… that it was firearms that were being discharged and people screaming and starting to run.”
One image circulating on social media appeared to show a man lying face down in the sand with what looks like blood around his head.
The Islamic State militant group had called on its followers to increase attacks during the Islamic fasting month of Ramadan, but no-one has yet said they were behind this attack.
A spokeswoman for the Thomson and First Choice tour operators said: “We are working closely with our teams in Tunisia and the relevant authorities to determine exactly what has happened and provide assistance to those affected.”