Officials said on Sunday morning that the lone shooter, who was armed with an assault-type rifle, a handgun and some type of other device, died in a shootout with the police force at the Pulse nightclub.
US news networks and a Congress member have identified the gunman as a 29-year-old US citizen with Afghan origins. But investigators have yet to make an official announcement.
Florida Governor Rick Scott declared a state of emergency, calling the incident “clearly an act of terror”.
Ron Hopper, of the US Federal Bureau of Investigation, said authorities would not yet release the name of the shooter to avoid jeopardising the investigation. He added that it is too early to say if the incident is linked to “terrorism or hate crime”.
Orlando Police chief John Mina described the shooting as “one of the worst tragedies we have seen”, adding that police officers “were shaken by what they have seen inside the club”.
“It’s a tragedy not only for the city but the entire nation,” he said. “Just a look into the eyes of our officers told the whole story.”
The injured, “many critically ill”, had been transferred to nearby hospitals, police and medical officials said. Among those injured was one police officer, whose kevlar helmet was hit by a round from the suspect.
“This did turn into a hostage situation. At approximately 05:00 hours (09:00 GMT) this morning, the decision was made to rescue hostages that were in there,” Mina said in an earlier press conference on Sunday.
In a statement, the White House press office said US President Barack Obama was briefed of the incident by Lisa Monaco, top adviser for Homeland Security and Counterterrorism.
As the shooting occurred, the nightclub urged patrons to “get out” and “keep running” in a post on its Facebook page.
One witness, who said he was inside the building during the incident, said that he heard about 40 shots being fired.
Christopher Hansen said he was in the VIP lounge of the club when he heard gunshots. He continued to hear shooting even after he emerged and police urged people to back away from the club. He saw the wounded being tended to across the street.
Police said they carried out a “controlled explosion” at the club hours after the shooting broke out, while entering the nightclub.
Video posted online showed a large number of police and emergency vehicles outside the nightclub, following the shooting.
The nightclub shooting came just a day after a man thought to be a deranged fan fatally shot Christina Grimmie, a rising singing star who gained fame on YouTube and as a contestant on The Voice, while she was signing autographs after a concert in Orlando.