Police have arrested the suspected gunman who opened fire on an Independence Day parade in suburban Chicago killing at least six people, wounding at least 30 and sending hundreds of marchers, parents with strollers and children on bicycles fleeing in terror, police said.

Highland Park Police Chief Lou Jogmen earlier said police have identified 22-year-old Robert E Crimo III as a person of interest and cautioned he should be considered armed and dangerous. Police declined to answer questions about how they identified Crimo.

Crimo was arrested around 6:30pm local time after his car, a silver Honda Fit, was spotted and he was stopped after a brief pursuit. He was being taken to the Highland Park Police Department as the investigation continues.

The alert that went out while law enforcement sought the suspect in the Independence Day parade at Highland Park, Illinois.

The July 4 shooting was just the latest to shatter the rituals of American life. Schools, churches, grocery stores and now community parades have all become killing grounds in recent months. This time, the bloodshed came as the nation tried to find cause to celebrate its founding and the bonds that still hold it together.

Mayor Nancy Rotering said the violence "has shaken us to our core", adding: "On a day that we came together to celebrate community and freedom, we are instead mourning the tragic loss of life and struggling with the terror that was brought upon us."

A Fourth of July parade-goer runs for cover after gunfire was heard at the parade in a suburb of Chicago. Photo / Lynn Sweet, Chicago Sun-Times via AP

The shooting occurred at a spot on the parade route where many residents had staked out prime viewing points early in the day for the annual celebration. Dozens of fired bullets sent hundreds of parade-goers - some visibly bloodied - fleeing. They left a trail of abandoned items that showed everyday life suddenly, violently disrupted: A half-eaten bag of potato chips; a box of chocolate cookies spilled onto the grass; a child's Chicago Cubs cap.

"There's no safe place," said Highland Park resident Barbara Harte, 73, who had stayed away from the parade fearing a mass shooting, but later ventured from her home.

Lake County Major Crime Task Force spokesman Christopher Covelli said at a news conference that "several of the deceased victims" died at the scene and one was taken to a hospital and died there. Police have not released details about the victims or wounded.

Lake County Coroner Jennifer Banek said the five people killed at the parade were adults and she doesn't have information on the sixth victim who was taken to a hospital and died there.

Deputy Chief Christopher Covelli of the Lake County Sheriff's Office speaks to the media after a mass shooting at a Fourth of July parade in Highland Park. Photo/ Getty

Roberto Velasco, Mexico's director for North American affairs, said on Twitter that one Mexican national was killed in Highland Park and added that two other Mexicans were wounded.

Dr Brigham Temple, medical director of emergency preparedness for NorthShore University Health Center, said the Highland Park hospital received 26 patients after the attack and all but one had gunshot wounds. Their ages ranged from 8 to 85, and Temple estimated that four or five patients were children.

He said 19 of them were treated and discharged. Others were transferred to other hospitals, while two patients, in stable condition, remained at the Highland Park Hospital.

The shooter opened fire around 10.15am, when the parade was about three-quarters through, authorities said.

Highland Park Police Commander Chris O'Neill, the incident commander on the scene, said the gunman apparently used a "high-powered rifle" to fire from a spot atop a commercial building where he was "very difficult to see". He said the rifle was recovered at the scene. Police also found a ladder attached to the building.

"Very random, very intentional and a very sad day," Covelli said.

US President Joe Biden said he and first lady Jill Biden were "shocked by the senseless gun violence that has yet again brought grief to an American community on this Independence Day". He said he had "urged Federal law enforcement to assist in the urgent search for the shooter, who remains at large at this time".

Agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives were conducting an urgent trace of the rifle, agency spokesperson April Langwell said. Federal agents conduct such traces to identify when, where and to whom the gun was last sold.

Biden signed the widest-ranging gun violence bill passed by Congress in decades, a compromise that showed at once both progress on a long-intractable issue and the deep-seated partisan divide that persists.

Officers from the Illinois State Police go do-to-door near the scene of a shooting involving multiple victims that took place at Highland Park. Photo / AP

Police believe there was only one shooter but warned that he should still be considered armed and dangerous. Several nearby cities cancelled events including parades and fireworks, some of them noting that the Highland Park shooter was still at large. Evanston, Deerfield, Skokie, Waukegan and Glencoe cancelled events. The Chicago White Sox also announced on Twitter that a planned post-game fireworks show is cancelled due to the shooting.

"You have a tragic mass act of violence that was random here today at a community event where people were gathered to celebrate, and the offender has not been apprehended thus far," Covelli, the crime task force spokesman, said. "So, could this happen again? We don't know what his intentions are at this point, so certainly we're not sure of that."

On Monday evening, more than a dozen police officers surrounded a home listed as an address for Crimo in Highland Park. Some officers held rifles as they fixed their eyes on the home. An armoured vehicle was also parked in the middle of the road.

More than 100 law enforcement officers were called to the parade scene or dispatched to find the suspected shooter.

Hours after the shooting, law enforcement officers searched an office building near where the shooting occurred. Nearby, armed FBI agents in camouflage had also escorted a family with two small girls across Central Avenue. The children looked visibly frightened even as their mother attempted to reassure them that the agents leading and flanking them would protect them.

Highland Park is an are north of Chicago. Photo / Google Maps

"Don't worry, you're safe now," she told them. "These guys will protect you."

Ominous signs of a joyous event suddenly turned to horror-filled both sides of Central Avenue where the shooting occurred. Dozens of baby strollers - some bearing American flags, abandoned children's bikes and a helmet bedecked with images of Cinderella were left behind. Blankets, lawn chairs, coffees and water bottles were knocked over as people fled.

Highland Park is a close-knit community of about 30,000 people located on the shores of Lake Michigan just north of Chicago, with mansions and sprawling lakeside estates that have long drawn the rich and sometimes famous, including NBA legend Michael Jordan, who lived in the city for years when he played for the Chicago Bulls. John Hughes filmed parts of several movies in the city, including Ferris Bueller's Day Off, Sixteen Candles and Weird Science.

Illinois Governor JB Pritzker said in a statement: "There are no words for the kind of monster who lies in wait and fires into a crowd of families with children celebrating a holiday with their community."

Gina Troiani and her son were lined up with his daycare class ready to walk onto the parade route when she heard a loud sound that she believed was fireworks - until she heard people yell about a shooter. In a video that Troiani shot on her phone, some of the kids are visibly startled at the loud noise, and they scramble to the side of the road as a siren wails nearby.

"We just start running in the opposite direction," she told The Associated Press.

Her 5-year-old son was riding his bike decorated with red and blue curled ribbons. He and other children in the group held small American flags. The city said on its website that the festivities were to include a children's bike and pet parade.

Troiani said she pushed her son's bike, running through the neighbourhood to get back to their car.

Law enforcement search downtown Highland Park following a mass shooting at the Fourth of July parade, which has left six people dead. Photo / AP

"It was just sort of chaos," she said. "There were people that got separated from their families, looking for them. Others just dropped their wagons, grabbed their kids and started running."

Debbie Glickman, a Highland Park resident, said she was on a parade float with coworkers and the group was preparing to turn onto the main route when she saw people running from the area.

"People started saying: 'There's a shooter, there's a shooter, there's a shooter,'" Glickman told the AP. "So we just ran. We just ran. It's like mass chaos down there."

She didn't hear any noises or see anyone who appeared to be injured.

"I'm so freaked out," she said. "It's just so sad."

- Michael Tarm, Roger Schneider & Kathleen Foody, AP