Two members of staff are being held hostage at Saughton Prison in Edinburgh.
The Scottish Prison Service said two members of the nursing staff are being held against their will.
An SPS spokesman said the prisoner involved is serving a life term.
He said: "The incident started at around eight this morning.
"It involved two members of staff, nursing staff - one male, one female - and a prisoner who is serving a life sentence.
"We have dialogue and hostage negotiations to resolve the situation and we are maintaining the usual visits by agents and families to other prisoners in the afternoon."
Police are on the scene, but the incident is being handled by prison service staff.
The incident comes just over a week after a prison officer was held hostage for around 20 hours by two inmates in Aberdeen.
The warder, who was taken prisoner at Craiginches jail, was eventually freed unharmed after a day of negotiations.
Saughton Prison serves courts in Lothian and Borders and Fife and holds an average of 640 male prisoners. They include adults and young offenders on remand and convicted prisoners serving up to four years.