The terrorist opened fire near a cafe on Dizengoff Street, according to the Jerusalem Post.
The injured were evacuated to Ichilov Hospital where one victim arrived in critical condition after being shot in the neck. Another was in moderate condition with gunshot wounds, while the third was lightly injured by shrapnel.
A Magen David Adom first responder told N12 News that while the injured were being treated at the scene, more shots were heard from a different location on Dizengoff Street.
One terrorist was killed and the search continues for other possible terrorists, according to the Tel Aviv district police commander. The terrorist was identified as Mo'taz Khawaja, a 23-year-old resident of the Palestinian village of Ni'lin near Ramallah in the West Bank.
According to Palestinian media, Khawaja was a Hamas operative who had previously been in Israeli prison twice for holding illegal weapons.
A Hamas Spokesman Abd al-Latif al-Kanua said, "The shooting terror attack in Dizengoff Street in Tel Aviv is an initial response to the crimes of the occupation, the last of which was the murder of three young people this morning," referring to a raid on Islamic Jihad militants in the West Bank.
Prime Minister Benjamin Netanyahu said in response to the attack, "We strengthen the work of security forces against terrorists. I'm sure that these incidents won't ease up as this is part of our work for building up the country."
