Both the Swedish Prime Minister and the country's intelligence agency said that it was a terror attack.
Stockholm: A truck crashed into an upscale department store in central Stockholm on Friday, killing at least two people, according to Swedish Prime Minister Stefan Lofven, who said all indications were that it was a terror attack.
One person was arrested.
The incident happened just 100 metres from the Indian embassy in Stockholm, said ANI reports.
People in the downtown area fled in panic, and the country's intelligence agency said a large number of people were injured. Swedish radio put the death toll at three.
"Sweden has been attacked," Lofven said. "This indicates that it is an act of terror."
Swedish broadcaster SVT said shots were fired at the scene, though it wasn't clear by whom and police said they could not confirm that.
Live television footage showed smoke coming out of the upscale Ahlens department store on Drottninggatan Street, which the truck smashed into. The department store is part of Sweden-wide chain. The building includes several stores at street-level.
"We stood inside a shoe store and heard something ... and then people started to scream," witness Jan Granroth told the Aftonbladet daily. "I looked out of the store and saw a big truck."
Photos from the scene showed a beer truck sticking out of the department store, and Aftonbladet daily reported that Swedish beer maker Spendrups said one of its trucks had been carjacked earlier Friday.
Friday's incident is near the site of a December 2010 attack in which Taimour Abdulwahab, a Swedish citizen who lived in Britain, detonated a suicide bomb, killing himself and injuring two others.
Abdulwahab rigged a car with explosives in the hope that the blast would drive people to Drottninggatan - the street hit Friday - where he would set off devices strapped to his chest and back. The car bomb never went off, and Abdulwahab died when one of his devices exploded among panicked Christmas shoppers.
There was no immediate claim of responsibility for Friday's attack, but vehicles have been common weapons in recent extremist attacks. Last month, in an attack claimed by the Islamic State group, a man drove into a crowd on London's Westminster Bridge, killing three people and injuring many others before stabbing a policeman to death. A fourth person, a woman thrown into the Thames by the force of the car, died Thursday.
The IS group has also claimed responsibility for a truck attack that killed 86 people in Nice, France, in July and another that killed 12 people at a Christmas market in Berlin.