They say 20 others have been injured and the alleged offender is now in police custody.
Police say that it is not a terror related incident and is connected to an earlier stabbing in Melbourne's south east this morning.
Spokesman, Stuart Bateson, says the man deliberately drove the car into the crowd.

Police with a man who is believed to be the driver of a car that has hit pedestrians in Bourke Street Mall in Melbourne, Friday, Jan. 20, 2017. Source: AAP
This witness has described seeing the car drive from Flinders street.
" That was outside Flinders Street Station, about 1:30, and it was really bizarre, because it was like, um, people were trying to stop this man who was driving around and around and he was half hanging outside the car - even the street performer in Federation Square was warning the crowd to stay away, because he was just so reckless, like, to the point where you, you know, he just didn't care, obviously, what he was doing."

Police and Emergency services at the scene where man has gone on a rampage in a car through busy Bourke St mall, Melbourne, Friday, Jan. 20, 2017. Source: AAP
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