According to Montenegrin police chief Zoran Brđanin, the suspected gunman first attacked a family who lived in his house as tenants.
“I killed two children aged 8 and 11 with a shotgun and injured their mother, who later died of her injuries in a medical facility,” Brđanin said.
“He then went out into the street and used the same gun to shoot other residents of this settlement.”
A witness told RTCG that the gunman “shot people indiscriminately as he crossed the street”.
Authorities say they identified the attacker – believed to be a 34-year-old man – and that his rampage ended when he was shot dead by a civilian.
Head of the clinical center in Montenegro, Ljiljana Radulovic, said three of the injured victims were in hospital in critical condition.
Montenegro President Milo Đukanović tweeted on Friday that he was “deeply shaken” by the news.
“I express my sincere condolences to the bereaved families, to all who have lost loved ones. All of us as a society must stand in solidarity with them during this difficult time,” Đukanović said on Twitter.