Two people were killed and at least eight were wounded in a shooting outside the landmark Empire State Building.
Mayor Michael Bloomberg said some may have been shot accidentally by responding police officers. The eight shot were either wounded or grazed during the exchange and not likely to die, he said.
NYPD Commissioner Ray Kelly identified the shooter as Jeffrey Johnson, 53, a former worker at Hazan Imports Corp. of 10 West 33rd Street, Manhattan, a women's accessories firm from which he had been laid off about a year ago. Police identified the victim only as a 41-year-old ex co-worker.
Johnson was armed with a .45-caliber handgun, Kelly said.
"I heard the gunshots," said Dahlia Anister, 33, who works at an office near the 102-story Empire State Building. "It was like pop, pop, pop. It was definitely in a bunch."
The victims were shot shortly after 9 a.m. on the sidewalk on Fifth Avenue.
Kelly said the victim and the suspect "had been accusing each other of harassment." He did not provide specifics.
Johnson, who appears to have no criminal record, was armed with a .45-caliber handgun, that had a magazine with eight bullets, officials said.
Johnson pulled the gun from a black bag and shot the victim once in the head, Kelly said.
He said the gunman was followed from the initial scene by a construction worker, who then alerted NYPD officers on anti-terrorism patrol outside the Empire State Building. Bloomberg said two officers shot Johnson after he pointed the gun at them. It was not clear how many times Johnson was hit.
"Whether [Johnson] got off any bullets, we just don't know yet," Bloomberg said at a news conference in Manhattan.
Kelly said none of the other injured -- two women and seven men -- were believed to have suffered life-threatening injuries. There were no children or elderly among the victims.
The shooting broke out at the height of the tourist season outside one of New York City's most popular attractions, startling tourists and commuters in one of the busiest areas of the city.
The United States has had two other mass shooting cases this summer. On July 20, James Holmes, 24, allegedly opened fire at a midnight screening of the Batman film "The Dark Knight Rises" in Aurora, Colorado, killing 12 people and wounding 58.
On Aug. 5, a gunman killed six people and critically wounded three at a Sikh temple outside Milwaukee before police shot him dead in an attack authorities treated as an act of domestic terrorism.