British police said they were called to a "major incident" in London's Finsbury Park area in the early hours of Monday morning.
One man was pronounced dead at the scene, a police statement said, adding that a 48-year-old suspect had been arrested. "The driver of the van...was found detained by members of public at the scene and then arrested by police in connection with the incident," the police statement said. Ambulance crews said eight people had been transferred to hospital.
"Police have confirmed this is being treated as a potential terrorist attack," Prime Minister Theresa May said, adding she would chair an emergency meeting later this morning.
"All my thoughts are with the victims, their families and the emergency services on the scene," she said.
The police counter terrorism command has launched an investigation into the incident.
A witness who lives opposite the scene told the BBC there was a white van stopped near the Finsbury Park mosque.
"From the window, I started hearing a lot of yelling and screeching, a lot of chaos outside‚Ä¶Everybody was shouting: 'A van's hit people, a van's hit people'," she said. "I didn't see the attacker himself, although he seems to have been arrested, but I did see the van."
The UK's largest Muslim umbrella body, the Muslim Council of Britain (MCB), said on Twitter that the crash happened outside the Muslim Welfare House, just down the road from Finsbury Park mosque. "Our prayers are with the victims," it said.
Harun Khan, the head of the MCB, described the incident as the "most violent manifestation to date" of Islamophobia, and called on authorities to do more "to tackle the growth in hate crime."
British Prime Minister Theresa May said her thoughts were with the victims of "this terrible incident."
Opposition leader Jeremy Corbyn tweeted that he was "totally shocked."
Police said they had deployed extra resources "to reassure communities, especially those observing Ramadan."
The Finsbury Park mosque has been associated with radical Islamist ideology in the past, but its image changed after it was shut down and reopened under a new management.
Its former imam, Abu Hamza, was jailed in Britain for inciting violence and racial hatred before being extradited to New York, where he was sentenced to life in prison for terrorism in 2015. That same year, the mosque took part in an open day organized by the MCB to promote better understanding of Islam following Islamist-inspired attacks in Paris. It has not been associated with extremist views for more than a decade.
London is on edge after eight people were killed in a van and knife attack on London Bridge and the Borough Market area earlier this month. In March, a man drove a car into pedestrians on Westminster Bridge and stabbed a police officer to death before being shot dead. In May, the city of Manchester was targeted with a suicide bombing at a pop concert that killed 22 people.
Britain's terrorist alert has been set at "severe," meaning an attack is highly likely.