A woman has been killed after a fugitive gunman, accused of shooting his grandmother and girlfriend, holed up inside a Los Angeles supermarket, sparked a three-hour standoff that ended with his surrender.

Between 40 and 50 people were in the Silver Lake Trader Joe’s store when the gunman burst in after crashing his car about 1.30pm on Saturday (LA time) following a police pursuit.

He fired shots at police during the chase from the LA suburb of Newton to Silver Lake. An officer returned fire, hitting him in the left arm.

LAPD tweeted the suspect shot the woman inside the store.

Throughout the three-hour drama, police spoke on the phone with the man, who was wanted for shooting his grandmother seven times. Her condition is not known.

The suspect at #SilverLake #TraderJoes is in #LAPD custody. Thank you to @LAPDHQ and all of our first responders for their bravery and swift action to resolve this incident.

— Mayor Karen Bass (@MayorOfLA) July 22, 2018

A 20-year-old woman in his car was rescued by police and taken to hospital for treatment.

LA Mayor Eric Garcetti praised police and firefighters who swarmed on the site for saving many lives and entered negotiations with the man.

“The heroism that was shown today was second to none,” Garcetti told reporters after the siege ended.

“I won’t go into great detail but there were hostages both released and saved by LAPD throughout the last couple of hours.”

Garcetti said the hostage who died was pulled out of the store by police but could not be revived. He said details would be released later.

After three hours, the suspect walked out of the store with a cluster of four hostages and appeared to be already handcuffed as the group emerged through the front door.

Police immediately surrounded him, searched him and took him to a waiting ambulance for treatment for his wounded left arm.

Investigators believe the suspect, whose name hasn’t been released, shot his grandmother and girlfriend around 1.30pm in South Los Angeles and then fled in a 2015 Toyota Camry after dragging the young woman into the car.

Police used lo-jack technology to locate the car and gave chase when efforts to stopit failed, Mayor Garcetti said, adding the suspect shot at police through back window of his car.

Breaking: Trader Joe’s worker drags out person after shots fired in Silver Lake. Officers looking for stolen car suspect. pic.twitter.com/J2yxU2M3rL

— Jeff Nguyen (@jeffnguyen) July 21, 2018

Don Kohles, 91, was walking into the supermarket when he saw a car being chased by police crash into a pole just outside.

“Then this guy comes out of the car and starts running toward TJs,” Kohles said.

“I look behind me and there were two police guys coming with heavy guns, then ‘boom boom boom boom’. So I go into TJ’s and I see this guy and he comes in.

“We all laid there for about a half an hour until LAPD came and got us out. They helped carry me across the parking lot and they sort of tossed me over a wall.”

LAPD officers approach the gunman’s car outside Trader Joe’s supermarket. Photo: EPA/Joe Garcia

People frantically tried to flee from the store and some were seen climbing through windows, jumping down and others darted through the back door.

Officers with riot gear, armed with rifles, stood along the side of the shop in the Silver Lake area on Saturday afternoon and used mirrors to try to look inside as hostages periodically came out the front door with the hands raised.

President Donald Trump tweeted that he is “Watching Los Angeles possible hostage situation very closely” and that Los Angeles police officers were working with federal law enforcement.

-with AAP