Until Friday's attacks the landlocked nation, an ally of Western governments against jihadist groups in the arid reaches of the southern Sahara, had largely been spared the kinds of attacks that have plagued its neighbors.
The assault follows a similar raid in November on a luxury hotel in Mali's capital Bamako which killed 20 people, including citizens of Russia, China and the United States.
The Ouagadougou assault, claimed by al Qaeda in the Islamic Maghreb (AQIM), signaled an expansion of operations for Islamist militants who are forging new alliances and stepping up their activities, echoing the growth of Islamic State in the Middle East.
"The situation we're experiencing since yesterday in Burkina Faso is unprecedented," President Roch Marc Christian Kabore said when he visited the scene of the attack. "These are vile, cowardly acts and the victims are innocent people"
"We call upon the Burkinabe people to be vigilant and courageous because we must include terrorist acts as an integral part of our daily struggle," he continued.
Kabore said 23 people from 18 different nationalities were killed in the assault on the Splendid Hotel and a nearby casino popular with Westerners and French soldiers based in Burkina Faso. The authorities gave no further details of the victims.
Gabriel Mueller, an Austrian aid worker staying at a different hotel, described the early scenes around the Splendid as a "complete bloodbath".
"A slight sense of safety is spreading. We can see the snipers from France and the USA, who are getting into position,” he told Austria's Salzburger Nachrichten newspaper via text message.
French ambassador Gilles Thibault put the death toll at 27 and said on Twitter that around 150 hostages had been freed during an operation that received support from French and U.S. forces.
Burkinabe authorities said that around 33 people had been injured and that four assailants, including an "Arab" and two "black Africans", were killed.
Meanwhile, an Austrian doctor and his wife were kidnapped overnight in the north near the border with Mali, the security ministry said.
The kidnapping occurred in the Baraboule area, and it was not immediately clear whether it was linked to the hotel attack.
