Chaos broke out during the showing of "The Dark Knight Rises" at the Century Aurora 16 theater when the shooting began, police and witnesses said.
The gunman went to the rear door of the theater and propped it open, then tossed in a canister before starting to shoot, according to a federal law enforcement source involved in the investigation.
A federal law enforcement official told CNN the man used tear gas, but Oates said Friday afternoon that it was not clear what the substance was.
Oates said the man was wearing a ballistic helmet and protective gear for his legs, throat and groin, black gloves and a gas mask.
Jennifger Seeger, who survived the attack, said she had seen the man and thought his get-up was part of the entertainment for the film's debut.
She said the man first shot toward the ceiling, then began shooting at people. He reloaded during his attack, she said.
"He was just literally just massacring anybody that got up that was trying to run away," Seeger said.
The smoke smelled like a Fourth of July firework, said CNN iReporter Adam Witt. It took a few gunshots before he figured out what was going on.
"I hit the floor and hid behind the seats in front of me, pulling my wife down to hide with me," Witt said. "It was the longest minute of my life. The gunshots just kept coming. I knew it could be over any second. I knew my wife could be gone any second. It was absolutely surreal. I felt something hit my left arm, and my first thought was, 'At least it's just my arm.'"
"There were so many people running," he said. "I didn't look back. I just remember getting up from the floor and shouting, 'We have to run.'"
Witt said he held his wife's hand as they rushed out of the theater.
"There was a moment where I lost her hand, but I grabbed her shirt," he said. "We didn't let go of each other."
Quentin Caldwell, who was attending a screening in the adjacent theater, said he wasn't sure at first what was going on, despite hearing a "pop, pop, pop, pop" sound.
"We really didn't know something was happening until someone came from the left entrance and said we should not go outside because somebody with a gun was out there," he said.
Armed guards appeared at the theater exit and demanded audience members raise their arms to ensure they were not carrying weapons, then told them to run, Caldwell said.
"Outside was chaos. There was wounded everywhere," he said.
Officers rushed many of the wounded to hospitals in their patrol cars.
Police initially said 14 people had died -- 10 in the theater and four at area hospitals -- but revised the death toll to 12 later Friday morning, according to Aurora Police Lt. Jad Lanigan. The initial injury count of 38 was revised upward to 59 Friday afternoon.
Several people remained in critical condition at area hospitals.
Of the wounded, the University of Colorado Hospital said it had treated 22 people, including nine who were seriously injured. All of the wounded suffered from gunshot wounds, which ranged from minor to critical, spkeswoman Jacque Montgomery said.