There was no indication of a terrorist motive, police said.
Several special police units had been deployed to the scene, a building in the centre of town, police said in a statement posted on social media. They added that 150 homes had been evacuated and the public was asked to stay away from the area.
"Stay inside and don't come to watch," the police wrote on X, formerly known as Twitter.
People were taken hostage at the Petticoat bar early Saturday by a man with weapons and explosives, national newspaper de Telegraaf reported, citing several anonymous sources.
Heavily armed police have cordoned off part of a Dutch town of Ede. (AP PHOTO)
A reporter for broadcaster NOS said a remote controlled robot was at the scene as well as anti-explosives units and police in protective gear.
ANP news agency reported the cafe was located on Nieuwe Stationsstraat.
Trains to and from Ede were cancelled, railway operator NS said on its website.
Ede is a rural market town located 85km southeast of Amsterdam.
Agencies