Thirteen people have died and dozens were injured after a van ploughed into crowds in Barcelona's famous Las Ramblas, popular with tourists, police and local officials say.
The vehicle sped along the pedestrian area, mowing down people and sending others fleeing for cover.
Police are treating it as a terrorist attack.
The head of the Catalan region said two people had been arrested.
Spanish media are reporting another suspect died in a shootout. El Mundo newspaper said the shootout happened in Sant Just Lesvern, on the outskirts of the city.
Police have released a photo of a man named as Driss Oubakir, who is alleged to have rented the van used to drive into pedestrians.
Local media say he is in his 20s, and was born in Morocco. It is unclear if he is one of those arrested.
So-called Islamic State has said it was behind the van attack in Las Ramblas, saying in a statement carried by its Amaq news agency that it was carried out by "Islamic State soldiers". The group gave no further evidence or details to back this claim.
The attack happened at the height of the season in one of Europe's top tourist destinations.
Witnesses said the van had deliberately targeted people, weaving from side to side as it drove down the boulevard.
Spanish media reports said the driver of the vehicle - a white Fiat that had been rented in the city - then fled on foot.
Vehicles have been used to ram into crowds in a series of attacks across Europe since July last year.
A businessman from New Orleans, who was just arriving in a taxi in Las Ramblas, said: "I heard a crowd screaming. It sounded like they were screaming for a movie star.
"I saw the van. It had already been busted on the front. It was weaving left and right, trying to hit people as fast as possible. There were people lying on the ground."
Aamer Anwar said he was walking down Las Ramblas, which was "jam-packed" with tourists.
"All of a sudden, I just sort of heard a crashing noise and the whole street just started to run, screaming. I saw a woman right next to me screaming for her kids," he told Sky News.
"Police were very, very quickly there, police officers with guns, batons, everywhere. Then the whole street started getting pushed back.
"Police officers who got there just started screaming at people to move back, move back."
Kevin Kwast, who is on holiday in Barcelona with his family, said: "I was eating with my family in La Boqueria market very near where the crash occurred.
"Hundreds of people started stampeding through the market... we started running with them going outside right into where casualties were already on the ground.
"Police pushed us into a money transfer shop and we've been sheltering there for over an hour."