The Paris terror suspects are holed up at an industrial building near Charles de Gaulle airport with a hostage, and have told police they are ready to "die as martyrs."
Helicopters are hovering overhead and armed police are flooding the area.
There have been reports that two people have been killed, but Paris prosecutors say there have been no deaths.
Police are now thought to be negotiating with the two suspects Said and Cherif Kouachi. Two planes have aborted landing attempts at the airport as the situation unfolds.
Local people have been asked to stay in their homes and offices, and children are being kept inside their schools.
It follows a car chase on the N2 motorway in which gunshots were fired between the men and police as their stolen car headed towards Paris.
Three helicopters have been hovering near the building in Dammartin-en-Goele, close to the country's busiest airport.
A close-up image of one of the helicopters shows armed police sitting at the vehicle's open door with heavy weaponry ready.
At around 9:40am Irish time, they moved away from the building by about half a mile. The French interior minister has confirmed that an operation to detain the suspects is under way.
In a televised statement Bernard Cazeneuve said: "An operation is under way which is set to neutralise the perpetrators of the cowardly attack carried out two days ago."
Armed police are ordering members of the media to leave the area, saying the situation is too dangerous.
The grey Peugot 206 was hijacked from a woman in the town of Montagny Sainte Felicite this morning between Crepy-en-Valois and Nanteuil-le-Haudoin.
Almost 90,000 terror police across France are involved in the hunt for the men, believed to be behind Wednesday's terror attack on Charlie Hebdo in which 12 people died.
They then fled the city and are believed to have hid overnight in an area to the northeast of the city.
John Lichfield is Paris correspondent for the London Independent.
He described to the Pat Kenny Show here on Newstalk how this latest operation unfolded.
It comes as a US official confirmed the brothers were both flagged as terrorists in a US database, and were also on the no-fly list, meaning they were barred from travelling to the United States.
According to French intelligence, Said Kouachi also travelled to Yemen in 2011 to receive training in small arms combat and marksmanship.
"Ireland stands together with France"
Taoiseach Enda Kenny has signed a book of condolence for the victims of the Paris shootings at the French Embassy in Dublin.
"Today as always, Ireland stands together with France" Mr Kenny wrote in Irish and French.
Yesterday. the US President Barack Obama wrote the words "Viva la France!" in a book of condolence during a visit to the French embassy in Washington on Thursday.
"On behalf of all Americans, I extend our deepest sympathy and solidarity to the people of France following the terrible terrorist attack in Paris," he wrote.
"As allies across the centuries, we stand united with our French brothers to ensure that justice is done and our way of life is defended.
"We go forward together knowing that terror is no match for freedom and ideals we stand for - ideals that light the world. Vive la France!".
Mr Obama also observed a moment of silence before shaking hands with French ambassador Gerard Araud.
A minute silence was also held across France on Thursday in honour of those who died in the terror attack.
At midday local time, crowds of people stood silently in public squares, schools and outside official buildings.
After the silence, bells tolled at Paris' Notre Dame cathedral and in churches across the country.
The lights of the Eiffel Tower were turned off for five minutes as a mark of respect for the victims.
Thousands of people also gathered for a second night in the Republique square to hold vigils.