Explosion and gun fire rent the air since 8pm Sunday as police battled unknown attackers in Mpeketoni area of Lamu.
Mpeketoni Police Station, two hotels and a petrol station were among those attacked, witnesses told the Nation.
Military spokesman Major Emmanuel Chirchir on his twitter account said attackers in 2 Nissan matatus entered Mpeketoni and started shooting, adding that surveillance aircraft was already airborne.
Residents said they were fleeing the area into the nearby bushes to take cover as police continue to battle unknown attackers.
“We have run into the bushes fearing for our lives but we are more worried about our children in the boarding school in town,” said Mrs Martha Mutigi an area resident.
Inspector General David Kimaiyo stated that they were yet to be furnished with details of the situation but confirmed the attack.
“We do not have full information on the incident and we are still trying to reach our officers at the moment,” he told the Nation in a phone interview.
Residents said Breeze View Hotel and Taweel restaurant are also affected as bellowing smoke was seen around their locations.
Sporadic gun fire and explosions spreading panic among residents with the police seemingly unable to contain the situation.