Gunmen stormed the Splendid Hotel in the capital city of Ouagadougou on Friday, burning cars and firing into the air.
"It is continuing at this time. We are trying to know how many attackers they are to better coordinate our actions," a security officer said. "Hostages have been taken. The operation could take several hours."
The French Embassy in Burkino Faso has classified the incident as a "terrorist attack."
"Serious incidents happened this evening at around 20:30 in the perimeter of Kwame N'krumah Avenue, Cafe Cappuccino, Hotel Splendid," the embassy said in a statement. "In view of the circumstances, the Embassy of France recommends that you go to your home, avoiding the aforementioned perimeter."
The Cappuccino cafe-restaurant across the street from the hotel has also reportedly been targeted. The Splendid is an upscale hotel popular with Westerners. The hotel is also sometimes used by French troops with Operation Barkhane, an anti-terror unit based in Chad.
While it remains unclear who is behind the incident, Islamist militants have conducted similar attacks in neighboring Mali. Last November, militants left 20 people dead after storming the Radisson Blu hotel. Burkina Faso has also undergone turmoil since 2014, when its longtime president Blaise Compaore was overthrown.