The 33-year-old gunman, a Swiss named as Roger S., fled from the house in Rehetobel, in the canton of Appenzell Outer-Rhodes, after injuring two police officers at around 9am on Tuesday morning.
In a press conference on Tuesday evening police said the house being searched contained an indoor cannabis plantation.
A large police operation was launched to track down the armed man and he was swiftly located and surrounded.
However police were unable to apprehend him as he was wearing a backpack which he said contained explosives. He threatened to set them off should police approach him.
Police negotiated with the gunman for several hours. The standoff finally ended around 5pm when police deployed a service dog against him, and he turned the gun on himself.
Robot devices were sent to check for explosives before police could approach the man's body and confirm his death.
One of the police officers shot in the morning, a 29-year-old, remains in a critical condition in hospital.
The perpetrator was known to police for previous offences.