The Intercontinental Hotel, located on a hilltop and heavily protected like most public buildings in Kabul, was previously attacked by Taliban fighters in 2011. The BBC, meanwhile, citing an interior ministry spokesman, reported two of the attackers had been killed.
Afghan interior ministry spokesman Najib Danish said details of the raid, which came days after a U.S. embassy warning of possible attacks on hotels in the capital, were unclear.
The hotel was hosting an IT conference for provincial officials and a guest at the hotel says the attackers were taking hostages.
Residents in the area report a high volume of ambulances at the scene but the area has been cordoned off by security forces.
Hotel manager Ahmad Haris Nayab, who escaped unhurt, said the attackers had got into the main part of the hotel through a kitchen and people tried to get out amid bursts of gunfire.
The fourth floor of the hotel, which boasts several restaurants and an outdoor swimming pool, had been set on fire during the raid, the NDS official said.
Guests hid inside of their rooms until the attack was over.
No-one has immediately claimed responsibility for the attack, and there is no immediate word on casualties. One was and killed by Afghan security forces and three others are still battling the forces from inside the hotel, he added.
Military helicopters were hovering over the hotel overlooking the city at the time of writing this report in the early hours of Sunday. At the entrance to the building, there was a physical inspection that could be easily evaded by scaling a low-level barrier and entering the lobby.
The US State Department had warned this week of a possible attack in Kabul. They include a bomb at a Shia cultural centre last month that killed more than 40 people.
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