At least two of the dead were military personnel, according to Carson City Sheriff Ken Furlong, who said the shooter wounded at least six other people.
Witnesses called emergency services reporting "that a man was in the parking lot at a... restaurant here in Carson City with an automatic weapon and shooting people," he told news channel MSNBC.
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"Many of the victims were National Guard persons at the restaurant at the time in uniform," he said after the incident in a chain restaurant, the International House of Pancakes, in the Nevada state capital.
Speaking to reporters at the scene, he said the gunman had shot himself by the time officers arrived. "The suspect... already had self-inflicted wounds and was lying in the parking lot," he said.
"At this point, seven persons were transported from the scene... for surgery. Two were established dead at the scene. There has been a third death," said Furlong, briefing reporters.
In Washington, the Pentagon blasted the shooting. "The senseless loss of life is a tragedy whenever and wherever it happens," said Department of Defense spokesman George Little.
The gunman was initially in critical condition, Furlong said, but he was later reported to have died of his injuries.
Another official in the sheriff's office declined to comment on whether the gunman had specifically chosen to target military personnel. "The sheriff may never know the motive," he said.
Fran Hunter, who was having breakfast at the nearby Casino Fandango, said the gunman came out of the restaurant and shot out the windows of another nearby eatery, before turning the gun on himself.
"I was standing in front of Fandango, and somebody said, 'Oh he shot himself'," she said, cited by the Reno Gazette-Journal.
Senator Harry Reid of Nevada, the top Senate Democrat in Washington, voiced sorrow at the shooting.
"According to early reports, three people are now dead and six others have been wounded by a single gunman," Reid said.
"I'm disturbed to hear that two of the victims were serving this nation proudly as part of the Nevada national guard," he said, adding that Carson City was a "peaceful, quiet place."
"To have something like this happen is just very, very difficult to accept," he said.
