A driver has rammed a car carrying weapons and explosives into a police van as it drove down Paris' Champs Elysees avenue, officials say, adding that the man died in the incident and the situation was under control.
The car hit the front of the van as it was overtaking a convoy of police vehicles, a police spokesperson said. Footage recorded shortly afterwards showed orange smoke billowing from the car.
Police said the 31-year-old French man was on a terror watchlist due to known links with suspected extremists.
France has been on high security alert following a series of militant Islamist attacks in recent years, including the shooting of a police officer in an Islamic State-claimed attack on a police bus on the Champs Elysees in April.
The Paris prosecutor's counter-terrorism unit said an investigation had been opened into the incident only a short walk away from the Elysee presidential palace and the US embassy. No bystanders or police were hurt. It was not clear how the driver of the car had died.
Interior Minister Gerard Collomb said the man's car was carrying weapons and explosives that could have caused a blast.
"This once again shows that the threat level in France is extremely high," Mr Collomb told journalists not far from the scene.
A police source told Reuters that the man was known to security services.
President Emmanuel Macron said last month his government would ask parliament to extend wider search and arrest powers granted under a state of emergency called after Islamist gunmen and suicide bombers killed 130 people in and around Paris in November 2015.