Police moved in on the suspect, Chung Chun Wah, 32, who was spotted at the Air Itam Market in Jalan Pasar at 7pm.
No further information was forthcoming and police chiefs are scheduled to call for a press conference later.
All roads leading to the market have been locked down, resulting in a 5km crawl towards the Air Itam township.
Inspector-General of Police Khalid Abu Bakar tweeted his congratulations to the men in blue.
He said: “Syabas STAFFOC @PDRMsia tumpaskan penjenayah selepas bbalas tembak di Air Itam Pg tadi. Spek disyaki tlibat kes bunuh 4 sekeluarga.”
The top cop indicated there was a shootout as Chung was known to have purchased a firearm illegally on the black market and proudly showed it to workers at the factory.
Yesterday, the 32-year-old man mercilessly shot four people at a poultry processing factory near the airport, including his 55-year-old mother, 28-year-old brother, and his two-year-old nephew.
His mother’s boyfriend and live-in partner, a 50-year-old man was also killed.
Chung had fled in a pickup truck after the killings and the vehicle was later found abandoned on the mainland near Bukit Mertajam.
Penang Police Chief Comm Abdul Ghafar Rajab described him as “armed and highly dangerous”.
Ghafar also revealed how the man mercilessly killed the four at close range — with four shots each to his brother, his mother and her boyfriend; and two shots on the head and neck of the two-year-old toddler.
“We feel that he might have been motivated by long-standing family problems and drug abuse,” he added.