A family is grieving the loss of a loved one as Melbourne counts the cost of another terror-motivated attack in the heart of the city.
One man is dead and two others are recovering in Royal Melbourne Hospital after they were stabbed by the Bourke Street assailant, who was shot by police and later died.
Police confirmed on Friday night the attacker had been a person of interest to them.
He was said to have extremist links and had run-ins with local police over drug use and theft, according to media reports.
The Islamic State group later said one of its fighters carried out the assault but it provided no evidence for the claim, news agency Reuters reported from Dubai.
Victoria Police would not provide the assailant's identity but said the man had come to Australia from Somalia in the 1990s and resided in Melbourne's northwest.
He arrived at the Bourke Street scene in a ute, which caught alight soon after he left it. The fire was soon put out and the bomb squad was called after barbecue-style gas cylinders were found in the vehicle.
He then stabbed three men, with one aged in his 60s dying at the scene.
A 26-year-old man and a 58-year-old, said to be Tasmanian businessman Rod Patterson, were taken to hospital with what police said were non-life threatening injuries.
Chief Commissioner Graham Ashton said police and civilians tried to subdue the attacker before police shot him in the chest. He died in hospital.
The busy shopping area came to a standstill during the incident, with police officers and vehicles lining Bourke, Swanston and Russell Streets.
A police cordon is expected to remain on Bourke Street until 8am on Saturday.
Mr Ashton is expected to provide another update on the police investigation into the incident on Saturday morning.
Meanwhile, police are reassessing major public events over the weekend in light of the terror attack.
Mr Ashton said Stakes Day, soccer matches at AAMI Park and Remembrance Day will be attended by more police than originally planned.
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