The slain family members were identified by relatives as Joanne Sinclair, 65, her granddaughter Brittany Luark, 22, Luark's boyfriend Roy Ralston, Nolan Ralston, 5 and Bradley Ralston, 1, the Chicago Tribune reported.
Another child, Cassidy Ralston, 6, was hospitalized in serious condition, Brad Teeter, Sinclair's son-in-law, said. Her injuries occurred at the scene of the shooting but there were no details.
The suspected assailant, identified by relatives as Rick Smith of Roodhouse, Ill., about five miles from Manchester, died after he exchanged gunfire with police during a chase, Manchester Mayor Ronald Drake said.
"The guy broke into the house," Teeter said. "I couldn't tell you about the guy, never met him. ... He apparently broke into the home of my wife's mother and shot everybody inside."
A neighbor said Smith was involved in a custody battle with the mother of their 4-year-old, a daughter of Sinclair's.
Smith was stopped shortly before 8 a.m. Wednesday, about 10 miles from the scene of the shootings, after a brief chase, the Chicago Tribune reported.
After he was pulled over, shots were exchanged, police said.
Illinois State police and SWAT teams were engaged in the chase, and schools in the area were closed as a precaution, the newspaper said.