Riot police set off the explosions outside the apartment building early Thursday in an effort to force the surrender of the gunman, who boasted of bringing France "to its knees" with an al-Qaeda-linked terror spree that killed seven people.
Hundreds of heavily-armed police, some in body armor, surrounded the five-story building where the 24-year-old suspect, Mohamed Merah, had been holed up since the pre-dawn hours of Wednesday.
As midnight approached, three explosions were heard and orange flashes lit up the night sky near the building. An Interior Ministry official said the suspect had gone back on a previous pledge to turn himself in - and that police blew up the shutters outside the apartment window to pressure him to surrender.
Sporadic blasts and bursts of gunfire rang out throughout the night, though officials insisted no full-out assault was under way. "It's not as simple as that. We are waiting," the Toulouse prosecutor, Michel Valet, told The Associated Press.
Merah, a Frenchman of Algerian descent, is accused of killing a rabbi and three children at a Jewish school on Monday in Toulouse. Authorities also believe he is behind a recent attack on French paratroopers that left three soldiers dead.
A French prosecutor said that the suspect had planned to kill another soldier imminently, prompting a major police raid on his home.
Three police have already been wounded trying to arrest the suspect. The suspect tossed his handgun out a window, but he had other weapons on him, including an AK-47 assault rifle.
Authorities said the suspect had stopped talking to investigators. He earlier told a police negotiator he would surrender sometime in the afternoon.
Prosecutor Francois Molins said Merah was a self-taught radical Salafi who had been to Afghanistan twice and had trained in the Pakistani militant stronghold of Waziristan.
The Associated Press contributed to this report.