Police stormed an apartment in the hunt for Abdelhamid Abaaoud, a Belgian Islamist militant who's believed to have planned the assaults that killed 129 people.
French authorities say he was not among the eight people arrested but reports have emerged claiming he was killed in the raid.
Chaos returned to the streets of Paris.
A pre-dawn raid in the suburb of Saint Denis saw residents rush to their windows to discover the streets filled with police officers and the air filled with gunfire and explosions.
Many had to be evacuated from their homes still dressed in their night clothes.
They describe their panic in a city still reeling from last week's bombings and gunfire that killed 129 people.
"I tried to protect myself, holding my baby tight. We saw bullets, lights, there were explosions. We felt the building shake, there were guys upstairs screaming 'shoot, shoot'."
"I heard gunfire, it went crazy. Gunshots, explosions, here there everywhere. It went on for ages. People were running everywhere."
By first light, news had emerged that one of the explosions came from a woman who detonated a suicide vest.
Officials say a body was also discovered in the debris but they have yet to identify who it is.
In all, eight people were arrested in the apartment and surrounding areas but the suspected mastermind of last week's attacks, Abdelhamid Abaaoud, was not among them.
Paris prosecutor Francois Molins says the operation successfully prevented another wave of attacks from a new team of terrorists.
"The investigation opened last Friday has progerssed really well. The assault carried out last night if proof of this. A new terrorist cell was neutralised. Seeing their weapons, organisation and determination, these commandos could've acted."
Mr Molins says he's unable to discuss the details of those who died or were arrested.
He made the comments shortly after the Washington Post quoted two intelligence sources saying Abdelhamid Abaaoud was killed in the raid, along with Salah Abdeslam - a suspect who's been on the run since the Paris attacks.
Officials say police fired 5,000 rounds of munitions into the apartment, leaving the building at risk of collapse.
The apartment's owner, Jawad Ben Dow, was among those led away by police.
He says he was lodging people in the flat as a favour to a friend.
"I found out that it's at my house, and that the people are holed up at my flat. I didn't know they were terrorists. Someone asked me a favour, I did them a favour. Someone asked me to put two people up for three days and I did them a favour, it's normal. I don't know where they came from I don't know anything. If I'd known do you think I'd have done it?"
France's Interior Minister, Bernard Cazeneuve, has praised the efforts of police including five officers who were injured.
"I'd like to warmly congratulate the 110 police officers who intervened in a very courageous way in this operation, being shot at for many hours in conditions they've never experienced before. I'd also like to praise the calmness of the people of Saint Denis and I'd like to say throughout this operation, by obeying police instructions, they contributed to the success of the operation."
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