Gov. Vasip Sahin said the attacker, armed with a long-barreled weapon, killed a policeman and a civilian outside the club shortly at around 1:45 am Sunday before entering and firing on people partying inside. He did not say who may have carried out the attack.
"Unfortunately (he) rained bullets in a very cruel and merciless way on innocent people who were there to celebrate New Year's and have fun," Sahin told reporters.
Private NTV news channel said the assailant entered the Reina nightclub, in Istanbul's Ortakoy district, dressed in a Santa Claus outfit.
Some customers jumped into the waters of the Bosporus to escape the attack, the report said. NTV television said some of the wounded were foreign nationals, without citing their nationalities.
The whereabouts of the assailant was not known and it was not clear if he had been caught.
Sinem Uyanik was inside the club with her husband who was wounded in the attack.
"Before I could understand what was happening, my husband fell on top me," she said outside Istanbul's Sisli Etfal Hospital. "I had to lift several bodies from top of me before I could get out. It was frightening." Her husband was not in serious condition despite sustaining three wounds.
Police in riot gear and machine guns backed up by armored vehicle blocked the area close to the Reina night club, one of the most popular night spots in Istanbul in heavy rain. Several ambulances flashing blue lights arrived on the scene, some taking wounded to Istanbul hospitals.
The White House condemned what it called a "horrific terrorist attack" and offered U.S. help to Turkey.
White House spokesman Eric Schultz said President Barack Obama was briefed on the attack by his national security team and asked to be updated as the situation developed. Obama is vacationing in Hawaii this week with his family.
White House National Security Council spokesman Ned Price said the attack on "innocent revelers" celebrating New Year's shows the attackers' savagery. He said the U.S. was sending thoughts and prayers to the relatives of those killed.
Price said the U.S. supports its NATO ally Turkey as both countries fight terrorism.
An estimated 600 people were celebrating inside the club that is also frequented by famous locals, including singers, actors and sports stars. Several shocked revelers were seen fleeing the scene after the attack and the music fell silent.
Ankara and Istanbul have been targeted by several attacks in 2016 carried out by the Islamic State group or Kurdish rebels, killing more than 180 people.
Justice Minister Bekir Bozdag vowed that Turkey would press ahead with its fight against violent groups.
"Turkey will continue its determined and effective combat to root out terror," Bozdag said on Twitter.
The club is located close to recent suicide attacks that killed dozens near a soccer stadium.
Security measures had been heightened in major Turkish cities, with police barring traffic leading up to key squares in Istanbul and the capital Ankara. In Istanbul, 17,000 police officers were put on duty, some camouflaged as Santa Claus and others as street vendors, state news agency Anadolu reported.
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Dusan Stojanovic and Mehmet Guzel in Istanbul and Suzan Fraser in Ankara, Turkey contributed.
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This story has been corrected to say that attack took place just after midnight Sunday instead of on Saturday.
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