CCTV footage has emerged that shows the Empire State Building gunman Jeffrey Johnson shooting his co-worker and the police returning fire.
The incident was recorded by a New York Police Department surveillance camera, and shows a brief confrontation between the gunman and police.
The video shows the 58-year-old Johnson walking down the street. When two police officers enter the picture, Johnson reaches for his gun and tries to open fire.
Passers-by, including children and people sitting on benches, start to flee the scene on seeing Johnson pull out a pistol.
The two police officers then open fire, putting the gunman down.
"I was on the bus and people were yelling, 'Get down! Get down!' I was thinking, 'You people are crazy; no one is shooting in the middle of midtown Manhattan at 9 o'clock in the morning,'" Marc Engel, an eyewitness, told the Associated Press.
Engel said the incident was over in seconds. He recalled: "A lot of pop, pop, pop, pop, one shot after the other."
New York Mayor Michael R Bloomberg said: "The tape clearly shows the guy has the gun out and was trying to kill the police officers."
The gunman's victim was identified as 41-year-old Steven Ercolino, the vice-president of the company that previously employed Johnson. Johnson is said to have held a personal grudge against Ercolino.
Johnson worked for the company for six years, but lost his job due to cutbacks. Johnson and Ercolino did not have a good working relationship, said Police Commissioner Ray Kelly.
"This was a terrible tragedy. We are not immune to the national problem of gun violence," said Mayor Bloomberg.
Nine others were injured in the shootout; some may have been accidentally wounded by the police, suggest reports. None suffered serious injuries.