Nashat Melhem killed in a gun battle and was tracked all the way down to some mosque in his home town of Arara, authorities said.
Police said a special forces team closed in on Melhem’s hideout and killed him as he stormed out, shooting at them.
The gunman was identified earlier as Nashat Milhem, an Arab from the northern Israel.
The shooting on Tel Aviv’s busy Dizengoff Street last Friday, which killed two Israeli men and wounded six other people, was recorded on security cameras at a health food store next door. The Associated Press reported that Melhem, an Israeli Arab, was killed in a shootout with police.
Milhem was detained by police in 2007 after attacking a soldier with a screwdriver and trying to grab his gun.
His father Mohammed, who worked for the Israeli police in recent years, implored Melhem to turn himself in to the police on Israeli TV.
Internal Security Minister Gilad Erdan thanked Israelis on Twitter for showing “vigilance, patience and understanding for the complexity of the police operation”.
Authorities haven’t yet created a motive for the killings. Initial Hebrew-language reports claimed that the suspect was “neutralized” before confirming that he was shot dead.
Security forces had hoped to capture Milhelm alive, but soon after noticing their presence, Milhelm burst out of the building and fired at police using the same weapon he used for last Friday’s shootings.
Israeli Arabs, who make up a fifth of the country’s 8.4 million people, enjoy full rights but have long complained of unfair treatment in areas such as housing and employment opportunities. The rest died in clashes with security forces. These figures do not include Milhelm’s victims.