A gunman whose name was on a terror watch list killed a soldier and attempted to storm Canada's parliament before being shot dead in turn by the assembly's sergeant-at-arms.
The attack - the second this week targeting Canadian military personnel - came as Canadian jets were to join the US-led bombing campaign against Islamist militants in Iraq.
Prime Minister Stephen Harper pledged not to waver, saying Canada won't be "intimidated" and would bolster its efforts to combat "terrorist" groups abroad.
The attacker, identified in the Canadian media as 32-year-old Michael Zehaf-Bibeau, was considered a "high risk" suspect whose passport had been confiscated to prevent him fighting abroad.
Instead, he shot and killed a Canadian soldier who was mounting a ceremonial guard at a war memorial in downtown Ottawa before storming into the nearby parliament building.
The soldier was named in reports as Corporal Nathan Cirillo, part of a detachment on ceremonial duties at Parliament Hill, the heart of Canada's national government and home to its legislature.
At least three people were admitted to hospital with minor injuries.
The attacker was killed, reportedly by a shot fired by the bearer of the House of Commons' ceremonial mace, Sergeant-At-Arms Kevin Vickers, who was hailed as a hero by MPs.
Police said an investigation was continuing, but Ottawa Mayor Jim Watson said on Wednesday night a lockdown in certain downtown areas was over, and that it appeared the shooter had acted alone.
"It appears there was just one shooter. And that shooter is dead," Watson told CNN.
The attack came two days after an alleged Islamist ran over two soldiers, killing one of them, in what authorities branded a terrorist attack.
Authorities had raised the security threat level from low to medium after the car attack.
"Canada will never be intimidated," Harper told the nation in a televised address.
"In fact, this will lead us to strengthen our resolve and redouble our efforts... to fight against the terrorist organisations who brutalise those in other countries with the hope of bringing their savagery to our shores."
MPs, staff and reporters, evacuated from the historic building on Parliament Hill, spoke of intense gunfire inside.
Video footage posted online by the Globe and Mail newspaper showed police ducking for cover as they advanced along a stone hallway, loud gunfire echoing among parliament's stone columns.
A member of parliament, Maurice Vellacott, said House of Commons security had told one of his aides the suspect had been killed inside parliament.
"I literally had just taken off my jacket to go into caucus. I hear this 'pop, pop, pop' - possibly 10 shots, don't really know," Liberal Party member John McKay told reporters outside.
"Suddenly the security guards come rushing down the hallways and usher us all out to the back of the parliament buildings," he said, as people scurried from the area.
Witnesses at the scene said they saw a man armed with a rifle running into parliament after shooting a guard at the war memorial.
Passers-by told reporters that a bearded man had gunned down the soldier and hijacked a passing vehicle to take him the short distance to Parliament Hill, on a bluff over the Ottawa River.
One witness, parliamentary aide Marc-Andre Viau, said he saw a man run past a caucus meeting, chased by police armed with rifles who yelled "take cover".
That was followed by "10, 15, maybe 20 shots," possibly from an automatic weapon, Viau said, adding: "I'm shaken."
Police raced to seal off the parliament building and Harper's office, pushing reporters and bystanders back and blocking roads.
Harper was attending a meeting with MPs in parliament at the time but was quickly evacuated to safety, his spokesman Jason MacDonald said.
In Canada's southern neighbour the US, President Barack Obama condemned the attack as "outrageous" after talking by telephone with Harper, the White House said.
Officials said US and Canadian air defences were on heightened alert.
On Monday, 25-year-old Martin Couture-Rouleau ran over two soldiers, killing one of them, before being shot dead by police as he emerged from his wrecked car wielding a knife.
Couture-Rouleau was reportedly a supporter of the jihadist Islamic State group operating in Iraq and Syria, and on the same watch list as Zehaf-Bibeau.
Canadian authorities have warned they are tracking 90 suspects, and "intelligence has indicated an individual or group within Canada or abroad has the intent and capability to commit an act of terrorism".
