Police received multiple 911 calls at around 10:25 a.m. CT with reports of a shooting at the Sikh Temple of Wisconsin in suburban Oak Creek.
Oak Creek Police John Edwards said officers called to the scene were tending to a victim when the suspect ambushed one officer and shot him multiple times. The suspect then shot at another officer, who fired back and killed him. The injured officer was undergoing surgery and expected to survive.
"We're treating this as a domestic terrorist-type incident," Edwards said, adding that the FBI would be handling the criminal investigation.
A motive was not known. However, sources told ABC News the shootings may be the work of a "white supremacist" or "skin head."
Authorities said four people were killed inside the temple and three were killed outside. The shooter was one of the three. It was unknown how many others were wounded.
Witnesses outside the temple described a hostage situation, fearing a gunman was still in the building with members of the temple hiding inside. Tactical teams swept the entire building, which Edwards said has been cleared. However, Greenfield Police Chief Brad Wentlandt said due to initial reports of multiple shooters, they were still methodically searching the temple's surrounding area to be sure.
A single semiautomatic handgun was recovered at the scene, according to ABC News.
The injured officer and two other victims were being treated at a Milwaukee hospital. Froederdt Hospital Chief Medical Office Lee Biblo said the three victims were all adult men. The hospital did not immediately identify the police officer or the other two victims.
Hospital spokeswoman Carolyn Bellin said one of the victims had gunshot wounds to the face and extremities, and another had wounds to his abdomen. She did not know which was the police officer, or the nature of the third victim's wounds.
According to information broadcast over police radio, a witness to the shooting told law enforcement the shooter was a white male, bald, with a heavy build.
Later in the day, authorities evacuated parts of a neighborhood in Cudahy, about six miles from the temple, and were searching a home. A Milwaukee County Sheriff's Department spokeswoman said the department's bomb squad was called to the scene, but could not provide details about why the team was called in. No explosives were found at the home.
Edwards did not give any information about the suspect. He said more information would be provided at a news conference planned for Monday morning.
President Barack Obama released a statement Sunday afternoon, saying he was "deeply saddened" by the shooting and that the people of Oak Creek are in America's thoughts and prayers.
Oak Creek is south of Milwaukee along Lake Michigan.
See photos from the scene of the shooting
ABC News and the Associated Press contributed to this report.