A woman in a suicide vest is thought to have blown herself up as police hunting the Paris terrorists laid siege to a flat where the mastermind of the attacks was believed to be hiding.
Repeated gunfire and explosions could be heard from the scene in the Saint-Denis suburb in the north of the city, close to the Stade de France national stadium, where three suicide bombers blew themselves up during Friday night's slaughter that killed at least 129 people.
The woman wearing the suicide vest detonated the explosives as scores of officers raided the property, officials said.
Stunned residents were evacuated from the area as scores of heavily armed officers flooded the streets.
Abdelhamid Abaaoud, from Belgium, has been named by French officials as the man behind the massacre and was initially believed to be in Syria.
Police anti-terrorist officers raided the apartment in a pre-dawn operation and a shoot-out followed.
Several people suspected over Friday's attacks were surrounded and French media reported at least three had been killed.
A numbers of police officers were also injured in the shoot-out.
The area's deputy mayor Stephane Peu told French television it was not a new terrorist attack and warned residents to stay indoors.
Authorities are also searching for two more extremists suspected of taking part in Friday's attacks.
News of a second unidentified terrorist thought to be directly involved in the Paris atrocity emerged after CCTV indicated there were three extremists involved in the attack on bars in the city.
It would take the total number of attackers to nine, with seven dead and the eighth surviving gunman, Salah Abdeslam, the subject of an international manhunt.
Police believe Abaaoud was in the apartment with up to five other heavily armed people.
At least seven explosions were heard at the scene of the stand-off in rue du Cornillon, in the heart of the historic multi-cultural area north of the city centre.