According to the BBC, officials say some 15 foreigners were killed, including citizens from Israel, France, Tunisia, Lebanon, India, Belgium, Jordan and Saudi Arabia.
The attacker left his gun before “taking advantage of the chaos” and fleeing the scene, Turkey’s PM said.
Binali Yildirim also confirmed the gunman was not dressed as Santa Claus, contradicting earlier reports.
The attack unfolded some 75 minutes into the new year as around 700 people gathered in the waterside Reina club, one of Istanbul’s most upmarket venues.
The attacker shot dead a policeman and a security guard at the entrance before heading into the club, which is popular with celebrities and foreigners.
Eyewitnesses described seeing dozens of bodies lying on the floor. Some revellers reportedly threw themselves into the Bosphorus to escape the carnage.
A professional footballer, Sefa Boydas, told AFP news agency that people appeared to be crushed as they ran away. “They say 35 to 40 died but it’s probably more because when I was walking, people were walking on top of people.”
According to CNN, an eyewitness, Yunis Turk, explained after police secured the Reina nightclub: “We were having fun, at first we thought it was a fight then there was a lot of gunfire.
“After the gunfire everyone started to run toward the terrace. We ran as well. There was someone next to me who was shot and fell on the floor. We ran away and hid under the sofas.
Some people jumped into the Bosporus, he said, a testament to the panic that engulfed the nightspot – it is freezing in Istanbul but people were willing to leap into the frigid water to escape the panic.
“For ten minutes there was gunfire and then for another five minutes they were throwing bombs, fired a bit more, then left,” Turk recalled.
Turkish Deputy Prime Minister, Numan Kurtulmus, also told CNN that the attacker was a lone assailant and that the authorities “are trying hard” to identify and apprehend the person in order to investigate any ties to terror groups.
In his new year message, Pope Francis condemned the shooting, describing it as unfortunate.
“Unfortunately, violence has once again struck on this night of hope and dreams.
“With sadness, I express my solidarity with the Turkish people.
“I pray for the numerous victims and injured and for all countries at war,” the Pope said.
Residents have continued to lay flowers outside the nightclub.
Dutch police on Wednesday fired warning shots in an effort to disperse a crowd, as a protest against plans to house asylum-seekers in a small town turned into a riot.
Protesters in Geldermalsen tore down fences and threw fireworks at police who responded with warning shots but no serious injuries were reported.
Chanting slogans against the proposed centre for asylum-seekers, around 2,000 people joined the protest in a town of 27,000, according to national broadcaster, NOS.
The Police in Geldermalsen, near Utrecht, said via their official Twitter account that they had “so far made numerous arrests, it’s is not clear yet how many”.
A meeting in the Dutch town to discuss whether to build the new centre for migrants had to be abandoned. It was evacuated by policemen as rioters sought to force their way into the building.
The incident was the biggest display of anti-migrant sentiment in the Netherlands since hooligans attacked a Syrian refugee centre in October.
Deputy Justice Minister Klaas Dijkhoff, who oversees immigration and asylum policy, called the incident in Geldermalsen “un-Dutch.”
He said that the protesters had crossed a line. “Finding shelter for asylum seekers poses difficult questions but there is a limit when it comes to expressing your opinion,” he said on Dutch TV.
“The line is crossed when you barge in yelling and rioting. That’s not appropriate in a discussion and, thankfully, we have seen that it went much quieter in other places and a solution was found. This is not ok.”
European countries are struggling to cope with the largest movement of migrants since World War Two, many of them Syrians who have come via Turkey, Greece and the Balkans.
The migration crisis is expected to dominate a meeting of EU leaders on Thursday.
Germany and several other nations are to discuss with Turkey ways of settling thousands of Syrian refugees ahead of the final EU summit of the year.
The mass influx of migrants will feature prominently on the agenda of a full European Union summit later on Thursday, after the executive European Commission proposed this week new measures to stem the tide, including a common coastguard.
German Chancellor Angela Merkel will explore new possible ways to admit Syrian refugees to Europe as she struggles to control a migrant crisis that has split the 28-nation bloc.
The German Chancellor, has been the driving force behind the voluntary resettlement idea, saying it would help Turkey, as well as EU member states to have more control over who gets to Europe but she faces resistance from other EU states.
The resettlement proposal would see EU countries accept Syrian refugees directly from Turkey under a voluntary scheme.
It is hoped the plan will stop people making the dangerous sea journey to Greece and will be more palatable for EU members than obligatory quotas.
The idea for voluntary resettlement is linked to a wider deal with Turkey under which Ankara would prevent migrants leaving for Greece in return for financial aid from the bloc, accelerated visa-free travel for Turks to the EU and reviving long-stalled membership talks.
The EU is at loggerheads over two distinct issues – relocation of migrants who have already arrived in Europe through Greece and Italy, and resettlement of a limited number directly from Turkey, Jordan and Lebanon.
The proposal, however, does not set a minimum number of refugees EU states would take from Turkey in the next five years and no formal decisions are expected when leaders of Germany, Austria, Belgium, Luxembourg, Finland, Sweden, Greece and the Netherlands meet Davutoglu.
Merkel may also try to enlist the help of other leaders individually during the main summit, diplomats said. France and others could still decide to join the prior meeting, they added.
A draft final statement prepared by diplomats for the full EU summit said only that member states should “rapidly examine” proposals for a “voluntary humanitarian admission scheme”.
Islamic State ISIS militants claimed on Friday that a US female hostage, Kayla Muller, has been killed in a Jordan air strike in Syria.
Report says that the woman died during air strikes on Raqqa. Ms Mueller was working with Syrian refugees when she was kidnapped in 2013.
Jordan said it carried out aerial bombardments on ISIS targets in Syria on Thursday. The strikes were carried out in response to the killing of a Jordanian fighter pilot by ISIS militants.
The US state department said it could not confirm the reports, but “people are looking into them”.
A video of Moaz al-Kasasbeh being burned alive in a cage was posted online by ISIS earlier this week. He was captured by militants in December after his F-16 fighter jet crashed in Syria. The video is believed to have been filmed on 3 January.
Foreign Minister Nasser Judeh said Thursday’s strikes were “the beginning of our retaliation” against ISIS. He also said, “We’re upping the ante. We’re going after them wherever they are, with everything that we have,” he said.
Thousands rallied in Jordan’s capital, Amman, on Friday morning in support of their government’s military response.
ISIS reported on Twitter that, “The criminal Crusader coalition aircraft bombarded a site outside the city of Ar-Raqqah today at noon while the people were performing the Friday prayer.
The report remains unconfirmed and a person close to the case, who has spoken to the hostage’s family, said her parents had not been notified by the White House or other official sources.
According to the ISIS site, a group that monitors online jihadi messages, the Islamic State reported on Twitter that Mueller, of Prescott, Ariz., “was killed when she was buried beneath the rubble of the building”.