A police car was fired on Saturday in the town of Deir al-Asad in northern Israel.
Police said officers shot back in response to the gunfire. There were no reports of injuries.
Video showed what appeared to be at least three bullet holes in the windshield of the police cruiser, which Channel 13 news reported were caused by the officers opening fire.
A police officer could be heard saying the shots were fired from an M-16 rifle.
A large number of officers were operating in the Arab town following the incident and set up checkpoints in an effort to locate the suspects, police said.
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A police helicopter was also assisting in the search efforts.
It was not immediately clear why the suspects opened fire.
The incident came amid a spike in violence this year in Arab communities, prompting Arab Israelis to hold protests and a general strike to pressure authorities to address the violence.
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