A lorry struck a crowd after Bastille Day celebrations in the southern French city of Nice, killing at least 80 people, including children, and injuring dozens, officials say.
It happened on the famous Promenade des Anglais after a firework display. The driver was shot dead and guns and grenades were found inside the lorry.
President Francois Hollande said the attack was of a "terrorist nature".
He extended a state of emergency across France by three months.
France had been on high alert following last November's attacks in Paris in which 130 people died and hundreds were wounded.
The state of emergency had been due to end on 26 July.
"France is badly hit," Mr Hollande said, adding that "we need to do everything we can to fight against" such attacks.
"All of France is under the threat of Islamic terrorism," he said, adding that "several children" were among those killed.
The president added that "operational reserves" would be deployed to support the army and security forces across the country, with particular focus on the borders.
About 50 people were injured, 18 of them critically, in the incident on Thursday, which was Bastille Day - France's national day.
Prosecutor Jean-Michel Pretre said the lorry drove 2km (1.2 miles) through a large crowd, the AFP news agency reported.
One image on Twitter showed about a dozen people lying on the street.
Interior Ministry spokesman Pierre-Henry Brandet denied earlier reports of hostage situations and said the driver of the lorry had been "neutralised".
He added that officials were investigating whether the driver acted alone.
No group has so far claimed responsibility, however prosecutors said the inquiry would be handled by anti-terror investigators.
On Friday, flags in France will be flying at half-mast, and Nice's jazz festival has been cancelled.
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