A woman has blown herself up and a suspect was shot dead during a police raid on a flat in a Paris suburb, while seven arrests were made.
Police targeted the flat in Saint-Denis in a search for the alleged mastermind of Friday's gun and bomb attacks in Paris, when 129 people were killed.
The fate of Abdelhamid Abaaoud, previously thought to be in Syria, is still unclear.
A government spokesman said remains of a third body may be under the rubble.
Prosecutor Francois Molins announced earlier that intelligence indicated Abaaoud was in Paris.
All victims of Friday's attacks - which targeted a concert hall, cafes and the Stade de France stadium and were claimed by the so-called Islamic State (IS) group - have now been identified, the government said.
In other developments
- Eagles of Death Metal, the band whose concert was stormed during the attacks, say in their first statement since returning to the US that they are "bonded in grief" with all those affected
- US President Barack Obama condemns the actions of two dozen state governors refusing to resettle Syrian refugees as hysterical and offensive
- IS media publish a photo of what it says was the bomb which downed the Russian airliner over Egypt on 31 October, killing all 224 people aboard
- The French aircraft carrier Charles de Gaulle leaves the southern port of Toulon for the eastern Mediterranean, to take part in air strikes on IS
- The Royal Navy destroyer HMS Defender will provide air defence cover for the French carrier, UK Defence Secretary Michael Fallon confirms
The police operation in Saint-Denis - where the Stade de France is located - began at 04:20 (03:20 GMT).
Speaking from the scene afterwards, Mr Molins said it had been ordered after phone taps and surveillance operations suggested Abaaoud, a Belgian of Moroccan descent, could be there.
The prosecutor said a young woman - said by France's BFMTV to be a relative of Abaaoud - had detonated her explosives belt soon after the raid began.
Another suspect was killed by grenades and police bullets, Mr Molins said.
The spokesman for the French interior ministry, Pierre-Henry Brandet, later told French TV station BFMTV that work was being done to establish whether the remains of a "third terrorist" were buried in the rubble.
Five members of the RAID police anti-terrorism unit were lightly injured while a RAID "assault dog", a seven-year-old Belgian Shepherd called Diesel, was killed.
Three men were arrested in the apartment. Two others were found hiding in rubble and a further two - including the man who provided the lodging - were also detained, he said.
He did not give the identities of those detained.
Multicultural Saint-Denis: by the BBC's Cagil Kasapoglu
Saint-Denis is a multicultural, multi-religious, multi-ethnic suburb or banlieue. There are Africans, Indians, Chinese, Turkish and many more from different backgrounds.
Many have "sans-papiers" status - meaning they do not yet have a legal status and an ID which would allow them to find a job.
During my visit to Saint-Denis on Tuesday, I heard quite a lot of "us versus them" when people talked about the "Parisians" and themselves in the banlieues.
As the operation got under way, roads were blocked off around Rue de la Republique in Saint-Denis, by lorry-loads of soldiers and armed police.
Local residents, who were urged to stay indoors, spoke of hearing continuous gunshots and large explosions.
Amine Guizani told the Associated Press: "They were shooting for an hour, non-stop. There were grenades. It was going, stopping, Kalashnikovs, starting again."
French Interior Minister Bernard Cazeneuve praised the security forces for operating "under fire for a number of hours in conditions that we have never seen before today".
More on the Paris attacks
- Rethinking strategy Time for West to review its priorities in Syria
- How vulnerable is Europe? Putting the dangers in perspective
- What happened in Paris? How events unfolded on Friday evening in the French capital
- Hollande upstages opposition French president's tougher line on counter-terrorism
- Who were the victims? Details of some of the 129 people killed
- The fight against Islamic State Can a modern, open Western capital ever be totally secure?
- Most wanted: Alleged mastermind Profile of key suspect Abdelhamid Abaaoud
The near simultaneous attacks on Friday Friday left more than 400 people wounded, with 221 still in hospital, 57 of them in intensive care.
European countries are on high alert. On Tuesday evening, a football friendly between Germany and the Netherlands was cancelled shortly before kick-off and two Air France planes heading to Paris from the US were diverted because of security threats.
IS said it had carried out the attacks in response to France's air campaign against its leadership in Syria, and pledged further bloodshed.
French President Francois Hollande said on Wednesday that IS threatened the whole world and he would be seeking a "large coalition" to work together to defeat the militant group.
What is Islamic State?
IS is a notoriously violent Islamist group which controls large parts of Syria and Iraq. It has declared its territory a caliphate - a state governed in accordance with Islamic law - under its leader Abu Bakr al-Baghdadi.
What does it want?
IS demands allegiance from all Muslims, rejects national borders and seeks to expand its territory. It follows its own extreme version of Sunni Islam and regards non-believers as deserving of death.
How strong is IS?
IS projects a powerful image, partly through propaganda and sheer brutality, and is the world's richest insurgent group. It has about 30,000 fighters but is facing daily bombing by a US-led multi-national coalition, which has vowed to destroy it.