The incident occurred on Friday afternoon at the Brinell high school in the central Swedish town of Fagersta, which has about 13,000 residents.
The school had just reopened after summer recess and it was the first day back for some of its students.
Police told a press conference that the suspect was an 18-year-old man whom they shot and took into custody on suspicion of murder.
Local police chief Tommy Alriksson said officers responded quickly to the school, which has 450 students ages 16 to 20.
"The first patrol entered and let us know that the perpetrator was subdued with gunfire," he said.
Public broadcaster SVT, citing unnamed sources, reported the attacker, wearing a helmet and carrying a sword, was a former student at the school with a previous conviction for assault.
The local health authority said two victims were teenage boys who were severely injured.
A third injured person was released from hospital.
"First it was just a regular day really. But then ... I saw a guy all covered in blood, at least down his back anyway. Then I saw the police and they flooded in," one Brinell student, Nellie, told Reuters alongside her mother Agnes Strandberg after a five-hour lockdown at the school.
Another student, Abdulrahem Salmo, said he had seen a victim with a bloody stab wound in the arm.
"Then people called the police and we just all ran from there because we were afraid," he told SVT.
Several other schools and public buildings in Fagersta were also initially locked down.
Fagersta mayor Asa-Marta Sjostrom said the small town was shaken.
"Our and the school's main focus right now is to take care of our students and our employees," she told reporters.
"We are working together ... to create safety and provide support to those who need it."
Swedish Prime Minister Ulf Kristersson cancelled a speech he was due to hold on Saturday, news agency TT reported.
"Our thoughts are with all those affected," he wrote in a post on social media platform X.
Sweden's King Carl XVI Gustaf said in a statement released by the royal household that he received news of the attack "with dismay and sadness".
Social Democrat leader Magdalena Andersson, whose coalition leads opinion polls for next month's parliamentary election, said: "All of Sweden stands together with Fagersta at this difficult time."
According to the Aftonbladet daily, police were investigating a TikTok account in connection with Friday's violence that posted a picture of a sword 20 minutes before the attack.
Dagens Nyheter newspaper said the picture appeared to be taken in a restroom at the school based on details in the background.
Before the month-old account was taken down on Friday, it contained videos that referred to two episodes of mass violence in Sweden along with Norwegian mass murderer Anders Behring Breivik.
Sweden's worst mass shooting occurred in February 2025 at a school in the south-central city of Orebro, when a gunman killed 10 people before turning the weapon on himself.
In 2015, a masked swordsman killed a teaching assistant and two boys at a school in Trollhattan, western Sweden, before being shot dead by police, who later said the attack was racially motivated.
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