The storming of Chabad House was shown live on local television, the BBC reported. The commandos were lowered to the roof from a helicopter as soldiers moved in on the ground.
Armed men attacked at least seven targets in Mumbai, India's financial center, on Wednesday. They included two five-star hotels, the Taj Mahal, one of the most famous in India, and the Oberoi.
A restaurant owner told the BBC gunmen entered his restaurant as customers with their weapons concealed, ate and then stood up and began firing.
Police said the dead included six foreigners, 14 police officers and 81 Indians, the BBC said. Estimates of the number of dead terrorists varied wildly.
By Friday morning, police said a wounded gunman might remain in the Ta and two of the attackers in the Oberoi. Earlier, commandos had gone from room to room, searching for suspects and freeing guests who had been hiding behind locked doors for hours.
The army reported "stiff resistance from the terrorists who were heavily armed and well entrenched inside," CNN said.
Explosions were heard in the hotels Thursday evening.
Deepak Datta, a guest at the Taj, described his rescue.
"There was a lot of explosions right before my rescue," he told CNN. "They were gradually coming up clearing the rooms. The explosions kept getting louder then they opened the door with a master key,"
Indian Prime Minister Manmohan Singh said the group that staged attacks is based outside outside the country. Officials said that questioning of captured suspects suggests at least some of those involved are Pakistani nationals, Press Trust of India reported.
M.L. Kumawat, a special secretary to the Home Ministry, said the attackers reached Mumbai by boat. PTI said four boats allegedly used by them have been seized.