Two knifemen slit the throat of a Catholic priest in a church in Normandy and took at least six others hostages before being shot dead by police.
The priest was identified as 84-year old Jacques Hamel, who was described as "someone who was treasured by the community. He was very discreet and didn't like to draw attention to himself" and was due to celebrate 60 years with the church in 2018.
Another hostage was reported as being "between life and death."
The Islamic State (ISIS/ISIL) has taken responsibility for the attack.
The men reportedly shouted "Daesh," the Arabic acronym for ISIS/ISIL, when they burst into the church. The attack took place at around 10 am local time and continued for approximately an hour before police were able to shoot the hostage-takers.
Eyewitnesses reported that the attackers shouted "Allahu Akbar" before being shot by police.
Police have sealed off the Church and the terrorism unit has taken over the investigation.
"The Pope has been informed and shares in the grief and horror over this perverse violence, condemning in the most dramatic way every form of hatred and offering prayers for the people affected," head of the Vatican press office Father Federico Lombardi said in a press release.
"We are particularly struck because this horrible violence, with the barbaric killing of a priest and the involvement of the faithful, happened in a church, a sacred place which stands for the love of God"
French President Francois Hollande is on his way to the scene. His popularity was already waning before the attack and commentators warned that his lackluster response to the Nice attack that killed 84 people on Bastille Day may have shredded the last vestiges of his reputation as a strong leader.
Both he and Prime Minister Manuel Valls were booed by the crowd when they gave a speech in Nice following the attack.
"The French understand some attacks are difficult to avert but they don’t accept that the government refuses to step up its reaction,” Jérôme Fourquet, head of political studies at Ifop, a polling agaency. “The issue is that the left seems to have reached its limit in the trade-off between individual liberties and security."
If the pace of terrorist attacks continues at the rate of this past week, it is inconceivable that the populations of France and Germany will accept the current level of governmental response.