Army officials said that gunmen stormed the five-star Pearl Continental Hotel in an attempt to take guests hostage. Stopped by a hotel guard, they fled up a staircase while "firing indiscriminately" at hotel workers.
A quick-reaction commando team of army, navy and police forces arrived, evacuated all guests and staff and then "launched a clearance operation" on the fourth floor, officials said. The attackers had created a bunker there by deactivating hotel cameras and planting explosive devices at entrances to the floor.
The commando team opened special entry points into the fourth floor, officials said, and shot and killed all three attackers. Pakistani Navy soldier Abbas Khan was killed in that encounter.
Gwadar, once a sleepy fishing village, is now being touted as "the next Dubai" by Pakistani officials. It is a centrepiece of the China-Pakistan Economic Corridor project, which aims to link transport, trade and communications from the Arabian Sea to far western China. Beijing is now the most important economic and political ally of Pakistan.
During the attack, Balochistan Chief Minister Jam Kamal Khan ordered security forces to place a high priority on ensuring the safety of all hotel guests. Officials said that there were no Chinese or other foreigners staying at the hotel during the attack.
Balochistan has long been plagued with political violence. The province is home to several regional militant separatist groups. The Balochistan Liberation Army attacked the Chinese consulate in Karachi last November. Separately, Islamist militants have attacked churches and other targets mostly in the provincial capital, Quetta.
Pakistani officials have accused India of sending spies to infiltrate the region, which India has denied. Pakistan, a longtime nuclear-armed rival of India, first successfully tested nuclear weapons in 1998 in the Balochistan desert.