The incident was ongoing at the Conde-sur-Sarthe Penitentiary Centre which holds dangerous or radicalised prisoners and those with serious disciplinary problems.
The prisoner, armed with an improvised weapon, was holding a guard and a female trainee, said regional prison official Emmanuel Baudin.
A source involved in the incident later said one of the hostages was released.
The inmate was still holding the second hostage, a female trainee, as police special forces arrived by helicopter at the Conde-sur-Sarthe Penitentiary Centre.
A justice ministry source said the inmate has a history of psychiatric problems and hostage taking. He has convictions for robbery, rape and for a murder of a prison cellmate.
Elite units had arrived at the prison by three helicopters, an AFP photographer at the scene said.
The national Prisons Administration Directorate confirmed a hostage situation without giving any further details. It said the justice ministry had alerted its crisis unit.
Security measures were increased in Conde-sur-Sarthe after a prisoner stabbed two guards with a homemade knife in March. After failed negotiations to end a standoff, security units launched an assault, wounding the prisoner.
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