Tourists from the UK, Canada and Malaysia hid inside a Crusader castle during armed clashes between troops and gunmen at the Jordanian site, officials have said.
Jordan's interior minister denied that foreigners had been held hostage at any point during the incident at Karak Castle.
Sunday's violent stand-off capped a series of shootings that killed 10 people, including a Canadian tourist, and wounded 34 others. It is the deadliest and most high-profile attack in Jordan in recent memory.
Interior minister Salameh Hammad said at one point, four gunmen were firing at police and bystanders from the roof of the castle.
"Inside the castle, there was a group of tourists," he said, adding that he did not believe the attackers were aware of the presence of the tourists during the stand-off.
"There were some foreigners that we can't say were taken hostage, but they were hiding," he said.
The Canadian woman who was killed was later identified as 62-year-old retired elementary school teacher Linda Vatcher.
Her adult son, Chris, was injured in the jaw and is being treated at a hospital in the Jordanian capital of Amman, the minister said.
The minister said a Malaysian tourist was able to escape the castle during the stand-off, while two British tourists got out after the four gunmen were killed by Jordanian security forces.
There has been no claim of responsibility for the shootings. Mr Hammad did not release the identities of the attackers or their nationalities, but said some of them appeared to have been familiar with the castle.
Jordan has faced homegrown extremism, with hundreds of Jordanians fighting alongside Islamic State (IS) militants in Iraq and Syria and several thousand more supporting the extremist group in the kingdom.
Jordan is a key US ally, and a member of a US-led military coalition fighting IS.
Sunday's events began when a police patrol received reports of a house fire in the town of Qatraneh in the Karak district. Officers responding to the call came under fire from inside the house.
Two policemen were wounded and the assailants fled in a car to Karak.
Mr Hammad said other weapons including five or six explosives belts were found in the possession of the gunmen, suggesting they had planned other attacks.
"I don't think the target was only Karak Castle," he said. "Maybe there were more targets, but Allah helped us discover this cell before more attacks took place."
In all, seven members of the Jordanian security forces, two local civilians and the visitor from Canada were killed.
Barb Rhymes, a cousin of the slain Canadian tourist, said the victim was from Burgeo, Newfoundland, and was visiting her son in Jordan where he works. Ms Rhymes said Ms Vatcher was a widow and the mother of two adult sons.
Sunday's shootings were the latest in a series of attacks over the past year that have challenged the pro-Western kingdom's claim to be an oasis of calm in a region increasingly threatened by Islamic extremists.
Political analyst Labib Kamhawi said rising unemployment and poverty in Jordan have made the population more vulnerable to recruitment by extremist groups.
The high-profile Karak shootings highlighted Jordan's vulnerability to such attacks, he said.
"People feel the response of the government was weak and that the government is not prepared to counteract such actions," he said.
"Previous operations were extremely limited, even in their targets, and were not trying to involve civilians."
Mr Kamhawi said Jordan's claim to be an island of stability "is not valid any more".
The attack is likely to further harm Jordan's battered tourism industry, which has been on the decline since IS seized control of parts of neighbouring Iraq and Syria two years ago.