The driver, identified as 29-year-old Sayfullo Saipov, swerved out of traffic and into a cycle lane on the West Side at around 3pm as the city was preparing for its Halloween parade.
The vehicle, a Home Depot rental pick-up truck, knocked down dozens of people at speed before moving back into traffic lanes and hitting a school bus.
A man in a red and blue jacket then got out of the truck and ran around the street, waiving two imitation guns and crashed into people.
Five victims of the New York terror attack were a group of school friends from Argentina celebrating 30 years since they graduated together.
Hernán Diego Mendoza, Diego Enrique Angelini, Alejandro Damián Pagnucco, Ariel Erlij y Hernán Ferruchi all died after being mowed down by a pick-up truck.
The group were cycling together in Manhattan when a truck swerved into the bike path and began plowing into them and others.
Eyewitnesses said at first they thought it was a Halloween stunt before an NYPD officer opened fire.
The suspect was shot in the stomach. He is in hospital and expected to survive.
It emerged he had left handwritten notes in Arabic pledging allegiance to ISIS, according to reports.
Inside the truck there were notes pledging allegiance to ISIS, the New York Times reported.
There was also an image of the black flag favoured by ISIS.
The New York city cop who took down the terrorist has been hailed a hero and "stopped the carnage".
Officer Ryan Nash, 28, had been responding to reports of a suicidal teenage girl at a nearby high school when the attack happened.
Nash was among the first responding officers at the scene and was confronted by suspect Sayfullo Saipov running through traffic brandishing what appeared to be two firearms.
The officer fired a number of shots, it is believed, hitting Saipov in the stomach. He was then handcuffed and taken to hospital.
Saipov is from Uzbekistan and came to the US in 2010, according to reports.
He had a Florida driver's licence but was also linked to New Jersey and Ohio.
Online records show the suspect has a criminal record in Pennsylvania and Missouri, all for traffic offences.
He had one, for, according to the courts website, after he “Failed To Equip Mtr Carrier Veh With/Maintain Required Brake System.”
Authorities quickly confirmed they were treating the incident as an act of terrorism.
In a series of tweets, President Donald Trump said: "In NYC, looks like another attack by a very sick and deranged person. Law enforcement is following this closely. NOT IN THE U.S.A.!
"We must not allow ISIS to return, or enter, our country after defeating them in the Middle East and elsewhere. Enough!
"My thoughts, condolences and prayers to the victims and families of the New York City terrorist attack. God and your country are with you!"
Belgium's foreign minister Didier Reynders confirmed a Belgian national was among the victims.
A police officer was also shot and sustained minor injuries in the carnage.
The tragedy happened just a short distance from the World Trade Centre where the US suffered the worst terror attack in its history on September 11, 2001.
Tuesday's truck rampage was the deadliest terror incident in New York since then.
Chillingly, there were visible tyre marks on the bodies of at least two of the victims crushed by the truck.
Crushed and crumpled bikes also littered the scene.
A child was also seen sitting in the lap of an adult wearing a neck brace.
The NYPD held a press conference, two hours after the horrendous incident.
James O'Neill, NYPD Commissioner described the incident as "a tragedy of the highest order" that killed innocent people just going about their day.
Mayor Bill De Blasio: "It's a very painful day in our city. This was an act of terror, a particularly cowardly act of terror aimed at civilians going about their lives.
"We know of eight innocent people who have lost their lives and more than a dozen injured.
"New Yorkers are strong and resilient and our spirits will not be broken by an act of violence. New Yorkers do not give in."
Police say one person has been taken into custody and there are "no other suspects".
Home Depot, which is the US equivalent of B&Q has confirmed it had rented a truck.
One witness said: "I saw a truck, a white pick-up truck, going down the bicycle lane and running people over."
Another witness said: "I thought it was a Halloween prank. I saw the gun running in a circle and I realised it was serious."