A lone terrorist was responsible for a deadly stabbing attack that unfolded on Bourke Street in Melbourne's CBD on Friday afternoon.

One man was killed and two others injured after being stabbed by a man who set a ute alight outside the Target store near the busy intersection of Bourke and Swanston streets.

The attacker, who was a 31-year-old Somali community member known to ASIO, was shot by police after he repeatedly lunged at them with a knife.

He was taken to hospital in a critical condition, but died on the operating table.

Read more: Sydney Morning Herald