At least one police officer was killed, two wounded and the attacker neutralised in the shooting, according to CNN affiliate BFMTV and the French Interior Ministry.
A machine gun, two hand guns and three kilos of TATP explosive were among the weapons found at a flat in the southern city along with Islamic State propaganda materials, according to Molins. Some said three police officers shot.
French President François Hollande said before ISIS took responsibility that the circumstances of the shooting indicate a terrorist attack.
France remains under a state of emergency, after a series of deadly terrorist attacks over the past several years.
Hollande, who said he was convinced the shooting was a "terrorist act", cancelled a trip to Bretagne and will chair a security cabinet meeting Friday.
ISIS issued a statement saying an Islamic State "fighter" carried out the attack. He said officers are searching the man's residence in Chelles, Seine-et-Marne, a Paris suburb, and are trying to determine if he had accomplices.
SHAPIRO: NPR's Eleanor Beardsley on the Champs-Elysees in Paris, thank you very much.
ISIS have claimed responsibility for the attack, in which the officer was said to have been killed while in a vehicle stopped at a red light.
"They were running, running", said 55-year-old Badi Ftaïti, who lives in the area.
He was arrested in February on suspicion of plotting to kill officers but was released because of lack of evidence. Also wounded was a female tourist. The avenue was clear of residents and tourists but teeming with security officers Thursday night.
"We're three days before a presidential election", Eleanor says. Candidates went ahead with a debate Thursday night.
"First of all, our condolences from our country to the people of France".
Security has been tight because of the vote. The assailant reportedly targeted a police vehicle.
Trump: 'What can you say?'It was immediately blocked by armed officers after the attack and nearby metro stations were closed. "I was in a panic, and I ran too", he said.
The CNN Paris bureau is on this street and staffers reported hearing a dozen shots. A police source also said there had been two assailants, and a witness told Reuters that one man got out of a auto at the scene and began shooting with a machine gun. Officers are now evacuating people from the area.
"It looks like another terror attack", Trump said during a joint news conference with Italy's prime minister at the White House. What can you say? "It never ends", the President said.
The Champs-Elysees is a main road lined with restaurants, cafes, exclusive designer boutiques and tourist shops.
Police authorities called on the public to avoid the area. Downing Street released a statement saying the United Kingdom. #ChampsElysees has been closed.
France is in a state of emergency and at its highest possible level of alert since a string of terror attacks that began in 2015, which have killed more than 230 people.
French far-right presidential candidate Marine Le Pen tweeted, "My emotions and solidarity for the police, once again targeted".
French conservative politician Francois Fillon, a candidate in France's presidential election, says campaigning should be suspended following the shooting in Paris.
"The sense of duty of our policemen tonight averted a massacre. they prevented a bloodbath on the Champs Elysees", Interior Minister Matthias Fekl told reporters.
The far-left's Jean-Luc Mélenchon also took to the social media platform, writing: " Thought [s with] the dead and wounded policemen and their families. "Solidarity with his injured colleagues and those close to them", he tweeted. "Complete support to law enforcement against terrorism", he said on Twitter.