A woman who detonated a suicide belt was one of two suspects to die as heavily armed units stormed the apartment, sparking a shoot-out in the early hours of the morning.
Belgian jihadist Abdelhamid Abaaoud - named by French officials as the man behind the massacre - was initially thought to be in Syria but reports indicated that he was the focus of the operation in the suburb of Saint-Denis in the north of the city.
Visiting the scene, prosecutor Francois Molins said intelligence from telephone surveillance gathered in the wake of the atrocity indicated Abaaoud could be holed up in a building in the area.
He said the identities of those inside the flat at the time of the raid are still being checked.
Swarms of Swat police supported by military units surrounded the building in Rue du Cornillon, a historic street in a culturally diverse area less than 1.2 miles from the Stade de France, where terrorists struck on Friday in the first of a series of attacks that left 129 people dead.
After a siege lasting more than seven hours, in which repeated gunfire and explosions could be heard, a government spokesman said the operation was over.
Five officers suffered minor injures and a police dog was killed, while seven people were arrested.
Stunned residents told how they were ordered to flee the property as officers moved in.
“The police arrived and they said, ‘Get out quick! This building is going to blow up’,” one man said.
The disclosure that Abaaoud is believed to be in Paris poses new questions about how the attackers, a number of whom were on the radar of authorities already, were able to avoid detection.
The 27-year-old has previously boasted of how he evaded police attempts to foil his terror plans before giving an interview to the English-language Islamic State magazine Dabiq, which suggested he was in Syria. His whereabouts since that interview in February had remained unknown.
Belgian authorities had suspected Abaaoud of being the head of a terror cell which was smashed in January in the wake of the attack on French satirical magazine Charlie Hebdo.
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 suspect, Salah Abdeslam, the subject of an international manhunt.
Reports emerged on Wednesday that he was on an EU-wide police list when he was stopped in September in Austria, where officials passed details to Belgian police.
Security services in France were already under pressure after missing an opportunity to detain the 26-year-old, whose brother Brahim has been named as one of the suicide attackers in last week’s outrage.
It was also confirmed on Wednesday that all 129 people killed in the massacres have been identified.
Islamic State - also known as Isil, Isis and Daish - has claimed responsibility for the strike.
Three Britons have been released from hospital following the Paris attacks and have returned to the UK, and 15 others are being supported for trauma by the Foreign Office and Red Cross, David Cameron said.
The Prime Minister told MPs: “We will make sure we provide all the support to those injured and traumatised by the events that have happened.”
Meanwhile, a couple from Leeds have talked about how they escaped the attacks at the Bataclan music hall by climbing through a skylight during the siege.
Tony Scott and fiancee Justine Merton were on the balcony when gunmen stormed the Eagles of Death Metal gig.
After using a grate as a ladder to climb to the roof, they hid with around 30 others in a nearby apartment.
The music venue suffered the most casualties during Friday’s attacks, with gunmen killing 89 people are critically injuring 99 others.
Speaking to the BBC’s Victoria Derbyshire programme, Mr Scott said the “insignificant” decision to go upstairs ended up being “the difference between life and death”.
Ms Merton had recently returned to her seat from the downstairs bar when they heard gunfire. The couple fell to the floor and hid behind the seats.
She said: “They were going round, systematically shooting people. If we had stayed there, all they had to do was come up the stairs and we would be next.
“I can’t imagine what they went through down on the floor, lying amongst the bodies.”
Mr Scott said: “We were crawling along behind the chairs on our bellies, but there were gaps between the rows of seats so we were exposed.”
They reached a door leading to a stairwell, where they were allowed through before it was barricaded shut again.
“The only way out was through a skylight and there were quite a few of us jam-packed into this stairwell,” Ms Merton said.
“There was a grate that they had pulled down, with three blokes hoisting people up because it was quite a height up.”
After reaching the roof, they were ushered toward a rooftop apartment, where up to 30 people were hiding.
Mr Scott said: “The lights went off and we were in darkness, but we could hear bursts of gunfire.
“We heard three explosions and we were thinking ‘is the building going to collapse?’”
His fiancee said: “I was just saying ‘you’re not getting out of marrying me that easily, we are going home’.”
Armed police eventually found them and they were escorted down a ladder and away from the venue.
Mr Scott said: “There’s a lot of hate being thrown around, but we just don’t feel any of it, we feel nothing but love really.
“We’ve been through quite a traumatic experience and we’re incredibly lucky to be alive.”
His fiancee added: “Although we saw the very worst of humanity on Friday, we saw the very best as well - people doing very selfless, courageous things.”