Police and emergency services responded to reports of shooters firing at a crowd gathered beside the beach just before 7pm on Sunday.
Multiple videos posted to social media show two gunmen standing on a footbridge connecting Campbell Parade to the Bondi Pavilion, firing shots into a crowd.
The men could be seen firing guns into the crowd as people screamed and sprinted for cover.
A number of people could be seen lying injured and unmoving on the grass at North Bondi.
Others were being loaded into ambulances on stretches while onlookers attempted to provide support.
There are reports of multiple casualties, but no details have been confirmed by authorities.
Separate footage showed officers standing guard over a hunting rifle lying on the ground with an exclusion zone in place.
NSW Police confirmed two people had been taken into custody shortly before 8pm.
"Two people are in police custody at Bondi Beach; however, the police operation is ongoing and we continue to urge people to avoid the area," the force said in a statement.
Police are still advising the public to avoid the scene.
Those on the ground have reported panic, confusion and disbelief as chaos continues to unfold with emergency services on the scene.
Many members of the Jewish community had assembled for a Hanukkah celebration in the area earlier in the evening.
NSW Premier Chris Minns described the reports and images coming from the scene as "deeply distressing".
A spokesperson for Anthony Albanese said the prime minister was aware of the incident.
"We are aware of an active security situation in Bondi," the spokesperson said.
"We urge people in the vicinity to follow information from NSW Police."
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