Militants reportedly stormed the base and witnesses reported hearing loud explosions and gunfire, as well as seeing smoke.
Around 15 to 20 attackers were said to be inside the base, and had also attacked three hangars housing aircraft.
Senior police official Tahir Naveed said the militants had been fighting with base personnel inside the Mehran base.
A government official claimed the attack was carried out by terrorists.
Journalist Sharmeen Obaid Chinoy, in Karachi, told Sky News: "From where I was I could hear a lot of firing and then several explosions.
"The Pakistani air force has a base on a main thoroughfare in the city and that has been attacked.
"Inside that air base there is a naval base and that has also been attacked
"Over 10 terrorists are still inside and there could be a hostage-like situation."
It is believed the terrorists entered the base through a Pakistan air force museum next to the base, which has lower security.
Prime Minister Yusuf Raza Gilani condemned the attack.
In a statement, he said: "Such a cowardly act of terror could not deter the commitment of the government and people of Pakistan to fight terrorism." Read More