A man believed to be a defendant in a bankruptcy case has shot two people dead in a Milan court, including a judge, according to a prosecutor.

Reports say the sound of shots sparked panic, with lawyers fleeing the scene while police officers searched for the gunman, who was thought to be still inside the building, prosecutor Giovanni Canzio said.

Media has identified the man as Claudio Giardiello said he had opened fire on the third floor of the building.

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Italian police later arrested the man, Interior Minister Angelino Alfano said on Twitter.

The “presumed assassin” was captured, Alfano said. “Now he’s being held in a Carabinieri military police barracks.”

The Palace of Justice is in the historic centre in Milan, only a few streets away from the city’s cathedral and shopping district.

“All of a sudden we heard at least three or four shots,” lawyer Marcello Ilia said outside the court.

“We tried to find out what was going on. There were suddenly lots of police officers who told us not to leave the room, they shut us in,” he said.

“After a few minutes we came out. They told us someone in a suit and tie was armed and at large in the court,” he said.

The Palace of Justice is in the historic centre in Milan, only a few streets away from the city’s cathedral and shopping district.

– with AAP