At least 19 people were killed and over 50 injured in what UK Prime Minister Theresa May said was being treated by police as a major terrorist attack.
An explosion came at Manchester Arena, in the center of the city, as US pop star Ariana Grande finished a sell-out concert attended by many young teenagers and their parents.
Eyewitnesses spoke of bodies strewn on the ground, covered in blood.
No-one has yet claimed responsibility for the attack although social media sites and web site linked to the extreme Islamic group ISIS were full of messages praising the attack, the Daily Telegraph reported.
May cancelled her general election campaigning as key ministers and security experts gathered in London for an emergency meeting.
Suspected terror attack kills 19, injures over 50 in Manchester
Still image from video shows people fleeing Manchester Arena in northern England where US singer Ariana Grande had been performing in Manchester, Britain, May 22, 2017. [Photo/Agencies]
"We are working to establish the full details" of what had happened in Manchester, May told the BBC.
"All our thoughts are with the victims and the families of those who have been affected," Mrs May said.
Eyewitness Andy Holey, who had gone to the arena to pick up his wife and daughter who had been at the concert, said: "As I was waiting, an explosion went off and it threw me about 30ft from one set of doors to the other set of doors.
"When I got up I saw bodies lying on the ground. My first thought was to go into the arena to try to find my family.
"When I couldn't find them, I went outside with the police and fire and looked through some of the bodies to try and find my wife and daughter.
"I managed to find them eventually and they're OK.
"It was definitely an explosion and it was some force. It happened near the box office at the entrance to the Arena."
Another person who witnessed the blast, Emma Johnson, told the BBC:"It was definitely a bomb. It was definitely in the foyer."
"We were stood at the top of the stairs and the glass exploded - it was near to where they were selling the merchandise.
"The whole building shook. There was a blast and then a flash of fire afterwards. There were bodies everywhere."
Bill Mullins, a London-based events worker in Manchester on a job, told China Daily he had just checked into his hotel in the evening when he heard a huge blast.
"It was crazy," he said.
The latest statement by Greater Manchester Police. [Photo/chinadaily.com.cn]
Manchester Arena is the region's biggest events venue, and can hold up to 18,000 people. It is regularly used to stage concerts. Grande, a 23-year-old reality tv star, is part of the way through a UK tour. Her management said she was not injured in the blast, which came just after she finished her last song. She sent out a message on Twitter to say she was "broken" by the blast and the deaths.
Her fans are mainly young teen and pre-teenage girls, many of whom were at last night's concert.
Pictures on social media and news websites showed teenaged girls, some wrapped in blankets, others bloodied and bandaged, being helped by emergency medical teams.
The BBC cited two unidentified US officials as saying the attack was carried out by suicide bombers. But police would not confirm that.
Police closed off central Manchester and the main railway station, near the arena, was closed and train services suspended.
Newly-elected mayor of Greater Manchester, former Labour MP Andy Burnham, paid tribute to the emergency services.
"My heart goes out to families who have lost loved ones, my admiration to our brave emergency services. A terrible night for our great city," he told reporters.
