A tense standoff between the police and a gunman who had stormed into a California veterans home and taken three clinicians hostage came to a grim end on Friday night when officers entered the room the gunman was in to find him and the hostages dead.

Authorities said Albert Wong, 36, arrived at the Veterans Home of California-Yountville in Napa County - the largest veterans home in the United States - in the morning with a rifle and exchanged gunfire with a sheriff's deputy before crashing a farewell party for employees and took three hostages: Christine Loeber, 48, Jen Golick, 42, Jennifer Gonzales, 29.

"There was a going-away party for a couple of the staff who were leaving today. Today was their last day. They were having cake and toasting and apparently he just walked in with this rifle," said Larry Kamer, who told reporters that his wife, an employee for the Pathway Home, was at the event.

Kamer said his wife was one of the hostages who had been allowed to leave.

The standoff had lasted about eight hours, paralysing the complex and nearby areas. Law enforcement officers from state and federal agencies had swarmed around the building as worried family members waited outside. Those inside were told to shelter in place.