At least four people are reported dead, two of them police officers.
The Fredericton Police Department tweeted Friday morning to caution residents to avoid Brookside Drive due to an "ongoing incident".
Fredericton is in New Brunswick province, about 50 miles east of the US border with Maine.
The Islamic State group claimed responsibility but Canadian police said they had no evidence the group was behind the shooting.
Robert DiDiodato lives on Oakland Avenue, which connects to Brookside Drive along the city's north side.
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A worker at a nearby Tim Horton's coffee and doughnut shop revealed staff had locked the doors and are keping customrs insid.
Travis Hrubeniuk, 27, said his fiancee had just left for work around 7:45 when he began hearing a steady stream of sirens. Nearby facilities were closed and authorities told residents to stay locked in their homes. We're following the situation closely,"he said on Twitter". She said she heard a "crack, crack, crack, four in a row" in rapid succession.
Fredericton is a city of roughly 58,000 about 75 miles from the ME border.
"I looked out the window and there were three police cars on the street just across from where I live", said another witness in the area. "They aren't letting customers in at the moment", he said.
"It's not something that we expect in Fredericton to wake up and hear about".