San Mateo police and SWAT teams were called to Hobart Avenue just off El Camino Real shortly after 9:30 a.m. A man had called 911 and told police his wife and two toddlers were being held at gunpoint in their home.
Officers arrived on scene and tried to negotiate with the suspect inside the house, asking him to come out.
"One of the officers was trying to talk the guy down; he was saying, 'come on out, come on out lets not get anyone hurt," witness Ken Antrobus said.
When an officer began to move towards the house, shots rang out and a gun battle ensued.
One minute later police ran out of the house with the three-year-old, followed an instant later by an officer carrying the one-year-old infant wrapped in a blanket.
"They looked perfectly fine, at least physically," Anthony Peterson said. "They rushed them over to some cars in safety and they checked them over."
The SWAT team was able to rescue the children because of the actions of their mother, 24-year-old Loan Kim Nguyen.
The victim barricaded herself in the bedroom with the two small children," San Mateo Deputy Police Chief Mike Callagy said. "Officers were in telephone contact with the victim and she reported the suspect was trying to gain entry into the room, she wanted to lower the children out the bedroom window."
The first shots were fired as Nguyen was lowering her children to officers. It is unknown if the suspect was shooting at the woman or officers.
The suspect was pronounced dead at the scene. Nguyen was transported to a local hospital where she later died.
Several officers also sustained minor injuries, San Mateo Police Chief Susan Manheimer said.