An eyewitness said after the vehicle burst into flames, someone walked up to the alleged driver and was stabbed directly in the chest.
Footage taken by witnesses showed police shooting the man after he threatened them with an object that appeared to be a knife.
One person was killed and two others were injured in a rush-hour stabbing rampage in downtown Melbourne Friday, that saw police shoot a knife-wielding suspect near a burning vehicle.
One of the cops then shoots him.
"The police officers are OK".
Police were forced to shoot the man, who continually made stabbing gestures at them, near a burning vehicle.
The knifeman clutched his chest and and fell to the ground where he was quickly arrested on the pavement by two officers and rushed to hospital under police guard.
"A man was arrested at the scene and has been taken to hospital under police guard in a critical condition", police Superintendent David Clayton said.
"At the same time passers-by were pointing out that members of the public had been stabbed".
Police shot the man in the chest and he is now in critical condition in hospital. However, the police has clearly refuted any links of terrorism with the incident. It's very early in the stages of the investigation'.
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Three people were stabbed in the incident and police confirmed one of the victims died at the scene, while another two were rushed to hospital.
The exact circumstances are yet to be determined at this stage. "They are in a suspected critical condition", they said.
They had initially thought the man was running to catch a tram close by, before a nearby police auto rushed to the scene.
'Police response was swift and overwhelming.
Another said they heard "what sounded like a bomb and gun shot".
- windix (@windix) November 9, 2018On Bourke St. Roads blocked.
"I've never seen a fire that big before".
Witnesses say they heard one bang or multiple bangs and gunshots in the area, which was subsequently put on lock down.
Her immediate thought was, "Oh no, not another Bourke Street incident", she said.
James Gargasoulas is accused of deliberately crashing into pedestrians, killing six and injuring 27 others.