Boston Marathon Bomber #2 captured alive.

The suspect in the Boston Marathon Bombing is in custody, police say.

Dzhokhar Tsarnaev, the 19-year-old believed to be involved in bombing the marathon on Monday, was taken from a boat in Watertown, Mass., around 8:45 p.m.

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Gunfire erupted shortly this evening in Watertown, Mass., whereDzhokhar Tsarnaev, the surviving suspect in the Boston Marathon bombings, was believed to have been spotted by a man checking on his boat.

Dozens of law enforcement officers rushed to secure a perimeter around Franlin Street in Watertown, where residents were immediately warned to stay indoors and "shelter in place."

The developments came just minutes after a press conference by law enforcement officials and Massachusetts Gov. Deval Patrick said a massive dragnet had failed to find the suspect.

George Pizzuto, who lives in the neighborhood where the police activity is centered, said that his friend and neighbor, David Henneberry, discovered a body in his boat and reported it to police around 7 p.m. tonight, just minutes after Patrick said residents could go outside again.

Pizzuto told ABC News that Henneberry went out into his backyard after the lockdown was lifted to get some fresh air.

"He looked and noticed something was off about his boat, so he got his ladder, and he put his ladder up on the side of the boat and climbed up, and then he saw blood on it, and he thought he saw what was a body laying in the boat," Pizzuto said. "So he got out of the boat fast and called police."

He said that Henneberry was being interviewed by police about what he saw, and that power had just been cut to the Henneberry's house.

"That boat's his baby. He takes care of it like you wouldn't believe. And they told him it's all shot up," Pizzuto said. "He's going to be heartbroken."

Erik Thompson, who lives across the street from the Henneberry's home, said he heard gunshots and saw law enforcement rush to the scene.

"There was some gunfire earlier which was almost immediately stopped. People were yelling to cease fire, and it seems to be focused on some homes across the street from where I am, which I think is the western side of the street," Thompson said.

"There's still a significant presence of law enforcement there," he said. "It's like D-Day."

The governor lifted an order that kept people in Watertown, Boston and surrounding suburbs inside all day.

The officials had said at the press conference that they thoroughly searched Watertown and had not found any sign of Tsarnaev.

Earlier in the day, police in took three individuals into custody in connection with the search for Tsarnaev.