Eyewitnesses said the gunman walked into the Palms Motel on Darwin's Esplanade and opened fire with a pump-action shotgun in a number of rooms just before 6 p.m.
The suspected gunman, aged 45, was later arrested, national broadcaster ABC News reported.
The police said in a statement that there was "currently four casualties, multiple injuries and multiple crime scenes", but added they did not believe the incident to be terror related.
Multiple witnesses told ABC News that the gunman was looking for someone called "Alex".
Witness Leah Potter said that a woman was shot multiple times in the legs at the Palms Hotel.
"A man came running with a woman in his arms from next door which is the Palms Motel, which is the motel next to my motel, and he just dropped her on the footpath right in front of us.
"I ran and got some towels and wrapped up her legs, she had little holes all in her skin on both her legs and she was bleeding everywhere," Potter said.
Another witness, John Rose, told The Australian newspaper that he saw the gunman walk into the motel with a sawn-off shotgun.
"He shot up all the rooms and he went to every room looking for somebody and he shot them all up, then we saw him rush out, jump into his Toyota pick-up, and rush off," Rose said.
According to Australian news site news.com.au, the police were treating the the Palms Motel as the main crime scene but had also cordoned off a social club less than a mile away.
( With inputs from IANS )