A gunman opened fire on the Al-Noor Islamic Centre, on the outskirts of the capital Oslo yesterday.
Public broadcaster NRK reported that police had found multiple weapons inside the mosque, and that someone in the building had managed to subdue the suspect before police arrived on the scene.
The suspected shooter injured one person during the attack.
After the shooting, police went to his residence and said they found his 17-year-old sister dead.
Police said the suspect refused to answer questions and investigators plan to interview neighbors for information about his stepsister and her death. The young, white male, carrying several guns, had expressed far-right and anti-immigrant views online, assistant police chief Rune Skjold told reporters at a press conference.
Irfan Mushtaq told local channel TV2 that the attacker had "carried two shotgun-like weapons and a pistol". The police on Sunday said the woman was identified as the stepsister of the shooter.
The mosque earlier this year implemented extra security measures following the massacre of more than 50 people at two New Zealand mosques by a suspected right-wing extremist.
The attack took place one day before thousands of Muslims gathered at mosques for the Eid celebration, and the congregation targeted by the gunman expected up to 1,000 people to attend.
"He broke through a glass door and fired shots", he added.
"We're investigating this as an attempt at carrying out an act of terrorism", he stated. The police are at the scene.
Skjold said police were also examining the suspect's online activity prior to the shooting at the mosque, but would not provide details.
"Nothing indicates that there have been more people involved".
"The terror attack in Baerum is the result of a long-lasting hate of Muslims that has been allowed to spread in Norway, without Norwegian authorities having taken this development seriously", the Muslim organization Islamic Council Norway said in a statement.
Local Norwegian newspaper Budstikka said it had contacted the mosque in Baerum in March after the Christchurch massacre and that officials there had said security would be tightened.