As shots and explosions rang out in the City of Light, five people, including the gunman, were found dead in the aftermath of the assault on the Jewish store in eastern Paris and several captives were freed, security sources said.
A further four people were in critical condition after the raid, as ambulances raced to the scene, joining a jam of police vans, other emergency vehicles and helicopters buzzing overhead
"It's war!" screamed a mother as she dragged her daughter from the scene.
An AFP reporter saw at least one body lying at the scene, where the sliding glass door of the shop was completely shattered.
The dramatic climax to the two standoffs brought to an end more than 48 hours of fear and uncertainty that began when the two brothers slaughtered 12 people at satirical magazine Charlie Hebdo in the bloodiest attack on French soil in half a century.
The weekly had lampooned jihadists and repeatedly published cartoons of the Prophet Mohammed which angered many Muslims.
A woman living in an apartment two storeys above the supermarket, Virginie Handani, 35, said she heard "two big bangs and gunfire that lasted around a minute" when the assault started.
President Francois Hollande was to address the nation before 1900 GMT.
All guns blazing
About 30 kilometres (16 miles) to the northeast, in the small town of Dammartin-en-Goele, the two Islamist Charlie Hebdo gunmen staged a desperate escape bid, charging out of the building all guns blazing at the security forces before being cut down in their tracks, a security source said.
Police confirmed their identity as Cherif and Said Kouachi, French-born orphans of Algerian origin.
The other hostage-taker in the eastern Porte de Vincennes area of Paris was also suspected of gunning down a policewoman in southern Paris Thursday and knew at least one of the Charlie Hebdo gunmen.
French police released mugshots of the man, Amedy Coulibaly, 32, as well as a woman named as 26-year-old Hayat Boumeddiene, also wanted over the shooting of the policewoman.
The Vincennes area was swamped with police who shut down the city's ringroad as well as schools and shops in the area. Authorities ordered residents to stay indoors.
In Dammartin-en-Goele, only 12 kilometres (seven miles) from Paris's main Charles de Gaulle airport, French elite forces had deployed snipers on roofs and helicopters buzzed low over the small printing business where the Charlie Hebdo suspects had been cornered early Friday.
Ahead of the stand-off, police had already exchanged fire with the pair in a high-speed car chase.
One witness described coming face-to-face at the printer's with one of the suspects, dressed in black, wearing a bullet-proof vest and carrying what looked like a Kalashnikov.
The salesman told France Info radio that one of the brothers said: "'Leave, we don't kill civilians anyhow'."
One 60-year-old choked back tears as she said how elite forces burst into the shop where her daughter works and ordered them to take cover.
"My daughter told me: 'Don't be scared mummy, we're well protected. She was calm but me, I'm scared. I'm really scared," said the woman.
Prior to the standoff, the suspects had hijacked a car from a woman who said she recognized the brothers.
'Mass casualty attacks'
The spectacular attacks came as it emerged the brothers had been on a US terror watch list "for years".
And as fears spread in the wake of the attack, the head of Britain's domestic spy agency MI5 warned that Islamist militants were planning other "mass casualty attacks against the West" and that intelligence services may be powerless to stop them.
Wednesday's bloodbath at Charlie Hebdo, which had repeatedly lampooned the Prophet Mohammed, has sparked a global chorus of outrage, with impromptu and poignant rallies around the world in support of press freedom under the banner "jesuischarlie" (I am Charlie).
US President Barack Obama was the latest to sign a book of condolence in Washington with the message "Vive la France!" as thousands gathered in Paris on a day of national mourning Thursday, and the Eiffel Tower dimmed its lights to honour the dead.
And as a politically divided and crisis-hit France sought to pull together in the wake of the tragedy, the head of the country's Muslim community — the largest in Europe — urged imams to condemn terrorism at Friday prayers.
In a highly unusual step, Hollande met far-right leader Marine Le Pen at the Elysée Palace on Friday, as France geared up for a "Republican march" on Sunday expected to draw hundreds of thousands including British Prime Minister David Cameron and his Spanish counterpart Mariano Rajoy and Italy's Matteo Renzi.
Interior Minsiter Bernard Cazeneuve announced that a total of 88,000 security forces were mobilised across the country and that an international meeting on terrorism would take place in Paris on Sunday.
Nine people had already been detained as part of the operation, Cazeneuve said.
'Stupidity will not win'
Meanwhile, questions mounted as to how a pair well-known for jihadist views could have slipped through the net and attack Charlie Hebdo.
Cherif Kouachi, 32, was a known jihadist convicted in 2008 for involvement in a network sending fighters to Iraq.
Said, 34, has been "formally identified" as the main attacker in Wednesday's bloodbath.
A senior US administration official told AFP that one of the two brothers was believed to have trained with Al-Qaeda in Yemen, while another source said that the pair had been on a US terror watch list "for years".
The brothers were both flagged in a US database as terror suspects, and also on the no-fly list, meaning they were barred from flying into the United States, the officials said.
The Islamic State group's radio praised them as "heroes" and Somalia's Shebab militants, Al-Qaeda's main affiliate in Africa, hailed the massacre as a "heroic" act.
Refusing to be cowed, the controversial magazine plans a print run of one million copies instead of its usual 60,000, as journalists from all over the French media landscape piled in to help out the decimated staff.
"It's very hard. We are all suffering, with grief, with fear, but we will do it anyway because stupidity will not win," said columnist Patrick Pelloux.