"All the hostages are safe and sound", Gerard Collomb said in a brief statement.
A police source said the hostage-taker initially hit one person who was able to escape. At this time, police do not now believe the situation is terror-related.
An armed police officer and a sniffer dog search the area.
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Authorities provided no details of the raid by specially trained intervention police officers four hours after the hostage-taking began at about 4 p.m. The hostages were held in a ground-floor office in a crowded neighbourhood.
French police and special police forces (BRI) secure the street as a man has taken two people hostage at a business in Paris, France, June 12, 2018.
"The man claims to be in possession of a bomb and a handgun", France Bleu said, adding that the hostage-taker demanded to speak with Iranian embassy. The attacker, who appeared to be brandishing a fake weapon, had doused his remaining two hostages in petrol, the source said.
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Shocking photos show police decked out in body armour with a local reporter warning of "an armed man".
Paris police have not revealed how many people were taken hostage.
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