Local reports suggested Abdeslam had been captured alive but injured in the Molenbeek district where some of the Paris attackers were from.
TV footage showed armed officers descending on the area and gunshots and explosions were reported.
The news came after the Belgian authorities said a man shot dead earlier this week was probably an accomplice of Abdeslam.
Fingerprints found at the address where Algerian national Mohamed Belkaid was killed suggest Abdeslam had been there too.
Two men escaped from the apartment during the gunfight with police and one of them is now thought to have been Abdeslam, 26, who fled from Paris after the terror attacks in November which killed 130 people.
Most of the Paris attackers died that night, including Abdeslam’s brother Brahim, who blew himself up.
Brussels-born Abdeslam, a childhood friend of suspected Paris ringleader Abdelhamid Abaaoud, is believed to have driven a group of gunmen who took part.
The Islamic State group claimed responsibility for the attacks.
Abdeslam suffered a leg injury and a second man was also injured during the operation, according to Belgium’s La Libre newspaper.
The paper said police, who were joined at the scene by the army, appeared to use grenades while eyewitness reports suggested white smoke could be seen coming from a property.
At least ten gun shots were reportedly heard.
A third man is reportedly thought to be holed up in a building in the area.
Fire engines and ambulances were seen driving into the gated complex, which remains under armed police guard, and a helicopter hovered overhead.