Monzer Khaldoun al-Hassan was suspected by police of providing explosive belts to two suicide bombers who blew themselves up when police raided their Beirut hotel on June 25th.
That raid had followed the arrest days earlier in another hotel of a Frenchman of Comoran origin on suspicion of plotting to carry out suicide bombings in Lebanon on behalf of jihadists.
Hassan was holed up in an apartment in the restive northern city of Tripoli when police moved to arrest him but he resisted, the security official said.
"There was an exchange of gunfire that lasted four hours during which the suspect hurled grenades at the police," the official said.
"As members of the security forces tried to enter the apartment, he was killed by one of the grenades he was handling."
Two policemen were wounded in the exchange of gunfire.
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Officers recovered an explosive belt from the suspect's apartment, the official added.
Hassan flew from Sweden to Lebanon seven months ago after two of his brothers were killed in neighbouring Syria, where they were fighting alongside rebels trying to topple President Bashar al-Assad.