A group of insurgents stormed the Intercontinental Hotel in Bagh-e-Bala area in Kabul city at about 9.20 pm on Saturday evening.
By 11.50 pm the hotel was still under siege and sporadic gunfire could be heard coming from the hotel.
TOLOnews journalist at the scene, Gulabuddin Ghubar, reported that relatives of staff trapped inside the hotel said at least four attackers gunned down guards at the entrance to the hotel and stormed the building through the kitchen.
Worried family members of hotel staff had gathered at the police cordon desperately waiting for news. Some said their calls to relatives inside were going unanswered while others said phones were off. A few that did get through said their relatives confirmed they were still trapped inside.
One floor of the hotel was also on fire, according to eyewitnesses.
At about 10pm, the interior ministry spokesman Najib Danish said the Crisis Response Unit (CRU) and Special Forces were at the scene and some were in the hotel.
He said a number of guests and staff had been taken to a secure area by them and security personnel were moving through the hotel in a bid to eliminate the attackers.
He said one attacker had been killed but three more were suspected of still being inside the hotel.
By 11.30 pm the heavy gunfire had died down and only sporadic shots could be heard coming from the hotel.
Ghubar also reported that all power to the building had been cut as Special Forces moved through the facility.
During the course of the evening at least three explosions were heard but no details were given by security officials as to what type of devices had been used.
Security officials also said earlier in the evening that it appeared as if some people had been taken hostage by the attackers.
According to Ghubar, the attackers were initially holed up in the kitchen before moving through the hotel.
Residents in the area reported a high volume of ambulances on standby at the scene but the area was cordoned off by security forces.
By 11.50pm no details had been released on casualties.
On 28 June, 2011, an attack on the same hotel left at least 21 people dead, including all nine attackers.
The Taliban claimed responsibility for that attack.
No one has however claimed responsibility for Saturday's ongoing attack.
Saturday's attack comes just two days after the US Embassy in Kabul issued a warning that they had received "reports that extremist groups may be planning an attack against hotels in Kabul, such as the Hotel Baron near Hamid Karzai International Airport. These groups may also be targeting public gatherings/demonstrations, government facilities, transportation, markets, and places where foreigners are known to congregate."
Reuters meanwhile reported that the hotel had been due to host an information technology conference on Sunday.
More than 100 IT managers and engineers were on site when the attack occurred, Ahmad Waheed, an official at the telecommunications ministry, told Reuters.
Although it shares the same name, the Intercontinental Hotel in Kabul is not part of the global InterContinental Hotel Group (IHG).