The bank robber was eventually shot dead by police snipers as he led the terrified woman through the parking lot of the Wachovia bank in Cary, near Raleigh, North Carolina.
Television stations had been following the siege live viewers saw the man crumple to the ground as he five officers opened fire.
Dead: After the three-hour stand-off the robber lies dead on the pavement as the hostage bolts to safety
'This is not how we wanted this to end,' Cary Police Chief Pat Bazemore said.
None of the seven hostages, including one who stayed hidden from the gunman and relayed information to police, nor the dozens of officers who surrounded the bank were injured.
The stand-off started at around 3pm yesterday when the gunman came entered the Wachovia bank and attempted to hold it up, authorities said.
When the police arrived two minutes later, the robber took hostages.
Two women were released shortly after police intervened, and two more people were released an hour later.
About two hours later, the suspect slowly walked out of the bank with the last remaining hostage, pointing a gun at her. He was shot after the woman went to her knees in the parking lot.
'I'm shaken - I hope I don't have to see something like that again,' said Zackery Marvel, 16.
He had watched the dramatic conclusion from his apartment several hundred yards away.
'It is a very sad situation that we did end up shooting the suspect.'
Hostages were talking to police and being united with their families, she said.
The gunman's next of kin were being notified, but his name has not yet been released.
The hostage drama shook the normally quiet town of Cary, which has a population of only 137,000.
The bank was not far from the Kids R Kids daycare, where officers helped evacuate about 100 children to safety. Four schools near the bank were also locked down.
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