A journalist for BFM Paris said two hostages had been taken.
Anti-terrorist police are surrounding the Mixicom computer store in the French capital's 10th arrondissement, close to the Gare du Nord Eurostar hub.
A spokesman for France's BRI intervention brigade said negotiations with the man were underway.
The motive for the attack was not clear but incident did not appear to be terrorism-related. The hostages were held in a ground-floor office in a crowded neighbourhood.
Shocking photos show police decked out in body armour with a local reporter warning of "an armed man".
During the negotiations, the hostage-taker reportedly evoked a odd mix of events, from the September 11 attack on the World Trade Center to the kidnapping and death past year of a young girl in an Alpine town.
The hostage-taker also claimed he had an accomplice outside the building with a bomb, according to Lefebvre.
Before officers moved in, Lefebvre said a third hostage had been freed.
The Evening Standard reports the attack doused the remaining two hostages in petrol.
According to reports he had demanded to be put in contact with the Iranian ambassador in Paris and that he didn't want any police cars in the vicinity.