The gunman is a police officer who has been a patient for the past two years at the psychiatric unit at the Cerrahpasa Medical Faculty Hospital, the Istanbul University Hospital.
Several doctors, as well as hospital staff, were initially believed to be being held hostage by the man.
However moments later the hospital's chief physician confirmed nobody was being held hostage, but the man had locked himself in a room with a gun.
Police rushed to the scene in the centre of the Turkish capital.
The armed man is holding doctors hostage at the Cerrahpasa Tip Fakultesi Hospital
A policeman told Hurriyet news the patient pointed a gun at his own head before locking himself in a room and threatening to shoot some translators.
Police are currently negotiating with the patient to convince him to leave the room safely.
Dr Zekayi Kutlubay, the hospital's chief physician, said: "Today, a young police officer who has been coming to the hospital because of his illness, did not react very well during an examination at the psychiatric department.
"No colleague or nurse is being held hostage.
"We are going to try to convince the man.
"Inshallah will not try to give up without any trouble.
"It is not any hostage crisis. We reported in August guns were banned and weapons were taken in.
"This was not one of those weapons but unfortunately it is a gun."
An hour after the chief physician's announcement, the police officer surrendered his weapon to police and was taken to the Bakirkoy Hospital for Mental and Neurological Diseases by ambulance.
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The news comes as Turks are on edge a month after Islamic State (ISIS) jihadis attacked the popular upmarket Reina nightclub on the shores of the Bosphorus in central Istanbul.
A total of 39 people were killed and at least 70 were injured in the incident after gunman Abdulkadir Masharipov entered the nightclub and started shooting.
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