Media reported Salah Abdeslam, the 26-year-old French suspect, was wounded in the operation as EU leaders met on the other side of the city to discuss Europe's migration crisis. "We got him," Belgium's Secretary of State for Asylum and Migration, Theo Francken, said on Twitter.
Several exchanges of gunfire rang out in the city's Molenbeek area - the scene of past investigations into the Paris attacks - and police officers were seen surrounding an apartment block there.
French President Francois Hollande and Belgian Prime Minister Charles Michel left the summit to discuss the operation, officials said.
Television footage showed black-clad security forces wearing balaclavas guarding a street. Reporters at the scene described white smoke rising from a rooftop and a helicopter hovering overhead.
Media reported two people had been arrested, a third suspect may have been involved and Abdeslam had been wounded in the leg, though there were conflicting accounts.
Belgian police had found fingerprints belonging to Abdeslam at the scene of an apartment raided on Tuesday, prosecutors said earlier.
The Belgian federal prosecutor's office also said an Algerian killed during that earlier operation was probably one of the people French and Belgian investigators were seeking in relation to the Islamic State attacks in Paris on Nov. 13.
Public broadcaster RTBF said it had information that Abdeslam, whose elder brother blew himself up in Paris, was "more than likely" one of two men who police have said evaded capture at the scene before a sniper shot dead 35-year-old Belkaid as he aimed a Kalashnikov.
Other Belgian media were more cautious, however, saying only there was evidence Abdeslam had been there.
A man named Samir Bouzid has been sought since December when police issued CCTV pictures of him wiring cash from Brussels two days after the Paris attacks to a woman who was then killed in a shootout with police in the Paris suburb of St. Denis.
She was a cousin of Abdelhamid Abbaoud, a Belgian who had fought in Syria and is suspected of being a prime organizer of the attacks in which 130 people were killed. Both died in the apartment in St. Denis on Nov. 18.
France's BFM television said the fingerprints were found on a glass in the apartment, where four police officers, including a Frenchwoman, were wounded when a hail of automatic gunfire hit them through the front door as they arrived for what officials said they had expected to be a relatively routine search.
Abdeslam's elder brother was among the suicide bombers who killed themselves in Paris during a shooting rampage in which 130 people died. The younger Abdeslam was driven back to Brussels from Paris hours later.
Belgian authorities are holding 10 people suspected of involvement with him, but there has been no report of the fugitive himself being sighted. There has long been speculation in Belgium that he could have fled to Syria.
Investigators believe much of the planning and preparation for the November bombing and shooting rampage in Paris was conducted in Brussels by young French and Belgian nationals, some of whom fought in Syria for Islamic State.
The attack strained relations between Brussels and Paris, with French officials suggesting Belgium was lax in monitoring the activities of hundreds of militants returned from Syria.
Brussels, headquarters of the European Union as well as Western military alliance NATO, was entirely locked down for days shortly after the Paris attacks for fear of a major incident there. Brussels has maintained a high state of security alert since then, with military patrols a regular sight.