At least 35 people were killed in a "terror" attack in Istanbul Sunday when at least one gunman reportedly dressed as Santa stormed an elite nightclub where party-goers were celebrating New Year, the latest carnage to rock Turkey after a bloody 2016.

At least one gunman shot dead a policeman and a civilian at the entrance to the Reina nightclub, one of the city's most exclusive party spots, and then went on a shooting rampage inside, Istanbul governor Vasip Sahin said.

Dogan news agency said there were two gunmen dressed in Santa Claus outfits.

"Unfortunately, at least 35 of our citizens lost their lives. One was a police officer. Forty people are receiving treatment in hospitals," Sahin told reporters at the scene of the nightclub on the Bosphorus on the city's European side.

Television pictures showed the New Year party-goers -- including men in suits and women in cocktail dresses -- emerging out of the nightclub in a state of shock.

Sahin said the attack started at 1:15 am local time,  just after the revellers had seen in the New Year.

"What happened today is a terror attack," he added.

Many party-goers threw themselves into the Bosphorus in panic after the attack and efforts were underway to rescue them from the waters, NTV television said.

Dogan news agency reported that some witnesses claimed the attackers were "speaking Arabic" while NTV broadcaster said special force police officers were still searching the nightclub.

TV images showed the scene cordoned off by police officers.