Dutch police say they are looking for a least one person who might have fled by vehicle.
Authorities immediately raised the terror alert for the area to the maximum level while Dutch military police went on extra alert at airports and at key buildings in the country as the Utrecht manhunt took place. The exact number of people hurt during the incident is not yet clear, but there are at least three fatalities and five people injured, a few of which are in critical condition.
The investigation into the Utrecht shooting is considering the possibility of a "terrorist motive", Dutch police have said.
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"We can not exclude, even stronger, we assume a terror motive". "We think there is just one perpetrator, but we can not exclude the possibly of there being several perpetrators".
Dutch police spokesman Bernhard Jens did not exclude that more people might be involved.
A suspect is under arrest in a shooting that killed three people and wounded five on a tram in the Dutch city of Utrecht. "The police ask you to watch out for 37-year-old Gokmen Tanis (born in Turkey) in connection with this morning's incident", a police statement said.
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In response to the shooting, police in Rotterdam - a city around 60 kilometers (37 miles) away from Utrecht - have increased security around mosques and stations in the city, according to a post on their official Twitter account.
The Utrecht municipality said it advised "everyone to stay indoors until more is known".
"A man started shooting wildly", one eyewitness told Dutch news site NU.nl.
The Municipality of Utrecht issued a statement as a first reaction to the event, where the shooting is descrived as "a terrible and radical incident in which victims have fallen".
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The Netherlands' fourth-largest city was on lockdown.