It happened inside the lobby of 201 Varick St. at about 5 p.m., located near the intersection with West Houston.
Sources said a 68-year-old man from Fort Lee, New Jersey, walked into the lobby with two weapons, encountered a line and opened fire. A federal security guard was shot in the upper body, and then the man shot himself with the same weapon.
The guard was rushed to the hospital, where he died a short time later. The gunman was pronounced dead at the scene.
LIVE VIDEO: News conference updating situation.
Sources said this looks like this was a lone gunman, based on initial investigation. But federal authorities are taking no chances, checking rooftops and area buildings.
The FBI has been called in to help with the investigation.
The federal building is a large block-long federal building housing several agencies, including a passport office and a post office.
Traffic in the area was blocked off, but traffic is now allowed to continue through the area.