Security forces have launched a huge manhunt for the gunman, cordoning off areas of the city.
The incident took place in Dizengoff Street in the city centre.
It was not immediately clear what motivated the shooting, which follows a wave of Palestinian attacks against Israelis over the past few months.
Police spokesman Micky Rosenfeld say "It's not clear what the background of the incident is, if it's a terrorist attack or if it's criminal-related."
Four of the wounded had suffered serious injuries, he said.
Emergency services rushed to the scene of the shooting on Dizengoff Street
A large manhunt is taking place in central Tel Aviv as police search for the attacker
Undercover units and counter-terrorism units were working in different areas of Tel Aviv, Mr Rosenfeld said, adding that no specific warning of an attack had been received.
However the city's mayor, Ron Huldai, told reporters at the scene that "this appears to be a terrorist attack motivated by nationalism," the Jerusalem Post reported.
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