Police Chief John Mina also said the shooter had some sort of "suspicious device." He said the suspect exchanged gunfire with an officer working at the club around 2 a.m., then went back inside and took hostages among more than 300 people inside.
Around 5 a.m., authorities sent in a SWAT team to rescue the hostages, and the suspect then died in a gunfight with those officers. Mina said police have not determined an exact number of casualties, but that "approximately 20" people were dead inside the club.
Florida Department of Law Enforcement Special Agent in Charge Danny Banks said during a news conference that the mass shooting is being investigated as an act of terrorism. He says authorities are looking into whether this was an act of domestic or international terror, and if the shooter was a lone wolf.
"This is an incident, as I see it, that we certainly classify as domestic terror incident," said Orange County Sheriff Jerry Demings.
FBI Special Agent in Charge Ron Hopper said there's no further threat to Orlando or the surrounding area.
When asked if the gunman had a connection to radical Islamic terrorism, Hopper said, "we do have suggestions that individual has leanings towards that."
Police had said previously on Twitter that there was a "controlled explosion" at the scene of the shooting at Pulse Orlando, a popular gay dance club. Mina said that noise was caused by a device intended to distract the shooter.
Mina Justice was outside the club early Sunday trying to contact her 30-year-old son Eddie, who texted her when the shooting happened and asked her to call police. He told her he ran into a bathroom with other club patrons to hide. He then texted her: "He's coming."
"The next text said: 'He has us, and he's in here with us,'" she said. "That was the last conversation."
Dozens of police vehicles, including a SWAT team, swarmed the area around the club. At least two police pickup trucks were seen taking what appeared to be shooting victims to the Orlando Regional Medical Center.
Pulse Orlando posted on its own Facebook page around 2 a.m.: "Everyone get out of pulse and keep running." Just before 6 a.m., the club posted an update: "As soon as we have any information we will update everyone. Please keep everyone in your prayers as we work through this tragic event. Thank you for your thoughts and love."
Police said local, state and federal agencies were investigating.
The incident follows the fatal shooting late Friday of 22-year-old singer Christina Grimmie, who was killed after her concert in Orlando by a 27-year-old Florida man who later killed himself. Grimmie was a YouTube sensation and former contestant on "The Voice."
Jon Alamo said he was at the back of one of the club's rooms when a man holding a weapon came into the front of the room.
"I heard 20, 40, 50 shots," Alamo said. "The music stopped."
Club-goer Rob Rick said it happened around, 2 a.m., just before closing time.
"Everybody was drinking their last sip," he said.
He estimated more than 100 people were still inside when he heard shots, got on the ground and crawled toward a DJ booth. A bouncer knocked down a partition between the club area and an area in the back where only workers are allowed. People inside were able to then escape through the back of the club.
Christopher Hansen said he was in the VIP lounge when he started hearing gunshots. He continued to hear shooting even after he emerged, where police were telling people to back away from the club. He saw injured people being tended to across the street.
"I was thinking, are you kidding me? So I just dropped down. I just said please, please, please, I want to make it out," he said. "And when I did, I saw people shot. I saw blood. You hope and pray you don't get shot."
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This story has been corrected to show that Banks is with the Florida Department of Law Enforcement, not the FBI.
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