The gunman, dressed in black, wearing a gas mask and a full body armour, marched into the packed theatre in Aurora, a suburb of Denver, Colorado, during a midnight showing of The Dark Knight Rises starring Christian Bale and Anne Hathaway.
He entered the theatre through the emergency exit lobbing two canisters that instantly filled the theatre with smoke and then used his automatic rifle to carry out a macabre dance of death.
Citing FBI, American TV networks said the gunman has been identified as 24-year-old James Holmes from Aurora.
Police said 10 people were killed at the scene, while they put the overall death toll to at least 12. Earlier police had said at least 14 people had died but later revised the toll.
The US Defence Department said that some members of the military were either killed or wounded in the shooting.
A shocked President Barack Obama called the shooting "horrific", after being told about it shortly before 5:30 am (1530 IST).
Obama, who was in Florida cut short his re-election campaign trip to the US state today to return to Washington after the shooting incident, spokesperson Jen Psaki said.
"Michelle and I are shocked and saddened by the horrific and tragic shooting in Colorado ... my administration will do everything that we can to support the people of Aurora in this extraordinarily difficult time," Obama said.
"We are committed to bringing whoever was responsible to justice. As we do when confronted by moments of darkness and challenge, we must now come together as one American family," he added.
Obama told a somber crowd at a campaign rally in Fort Myers that the shooting "reminds us of all the ways that we are united as one American family."
"Such violence, such evil, is senseless. But while we will never know fully what causes somebody to take the life of another, we do know what makes life worth living," Obama said.
"The people we lost in Aurora loved and they were loved," he added.
FBI spokesman said there was no indication so far of any connection to terrorism. The White House also said that US officials do not believe the shooting is related to terrorism.
"This is a local law enforcement investigation at this point, and what we can say is that we do not believe at this point that there is an apparent nexus to terrorism," Jay Carney, spokesman for Obama, said.
The gunman was later taken into custody from a car park lot behind the theatre.
The shooter first threw some sort of disorienting smoke bomb and then sprayed the people with automatic gunfire, witnesses were quoted as saying by local 9News.
The gunman, after being taken into custody, told the police that he had explosives in his apartment, which has now been evacuated.
The gunman had booby-trapped his apartment with a "very sophisticated" device, police told local media.
FBI rushed to the shooting scene and is investigating the incident.
Pentagon press secretary George Little has said that it is not yet clear how many military casualties there were, or specifically whether they were killed or injured.
A Pentagon spokesman also said that initial indications were that Holmes was not a member of the military.
Some of the injured were children, with the youngest a 4-month-old baby who has been released from treatment. Victims were being treated for chemical exposure apparently related to canisters thrown by the gunman.
Police said they received the call about the shooting around 1 am local time at the Century 16 Movie Theatre.
After that, police from all over the metro area were rushed to the shooting scene, as the Americans woke up to the tragic news.
There is no report of casualty or injury to any Indian- American. The entire area has been evacuated.