Highland Park Police Commander Chris O'Neill, urged people to stay indoors as officers search for the suspect who is described as a white male wearing a white or blue T-shirt.

Lake County Major Crime Task Force spokesman Christopher Covelli said the gunman apparently opened fire from a rooftop using a rifle that was recovered at the scene.

He confirmed police believe there was only one shooter and that he should still be considered armed and dangerous.

According to The Chicago Sun-Times, the parade was stopped after just 10 minutes when shots were fired.

Several witnesses told the newspaper that they heard gunfire just after 10am and that hundreds of parade-goers - some visibly bloodied - fled the route, leaving behind chairs, pushchairs and blankets.

A Sun-Times reporter saw blankets placed over three bloodied bodies.

Debbie Glickman, a Highland Park resident, told Associated Press she was on a parade float with co-workers when she saw people running away from the area.

"People started saying 'there's a shooter, there's a shooter, there a shooter'.

"So we just ran. We just ran. It's like mass chaos down there."

Illinois Congressman Brad Schneider, who was at the event, tweeted: "Hearing of loss of life and others injured.

"My condolences to the family and loved ones; my prayers for the injured and for my community; and my commitment to do everything I can to make our children, our towns, our nation safer. Enough is enough!"