Two people have locked in 140 guests and 30 employees in "a hostage-taking situation", the hotel's US owners said.
Gunmen entered the hotel, which is popular with expat workers, shooting and shouting "God is great!" in Arabic.
A Malian army commander told the AP news agency that about 20 hostages had been freed.
Hostages able to recite verses of the Koran were being released, a security source has told Reuters news agency.
Six staff from Turkish Airlines are staying at the hotel, and a Chinese guest told China's state news agency Xinhua that he was among about seven Chinese tourists trapped there.
French newspaper Le Monde quoted the Malian security ministry as saying at least three hostages had been killed, AFP news agency reports.
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