French Prosecutor Francois Molins said on Tuesday that Kermiche and an unknown accomplice, armed with knives, had stormed the church and took the 86-year-old priest, three nuns and two worshippers hostage.
Kermiche was known to security services, having twice been arrested on his way to Syria, and was under house arrest and wearing an electronic monitoring bracelet at the time of the attack.
One of the nuns managed to escape and call police, who, upon arrival, tried to negotiate with the hostage-takers through a small door.
Molins said police were unable to launch an assault on the church as three hostages were lined up in front of the door.
Two nuns and one worshipper then exited the church followed by the two attackers, one carrying a handgun, who charged police shouting “Allahu Akbar” (God is greatest).
“The two were neutralized” and killed by police, said Molins.
The attack, which was claimed by the Islamic State armed group, comes less than two weeks after the truck attack in Nice in which 84 people were killed.
French religious leaders call for enhanced security
French religious leaders on Wednesday called for authorities to boost security at places of worship after jihadists killed a priest in a Normandy church.
“We deeply desire that our places of worship are the subject of greater (security) focus, a sustained focus,” said French Muslim leader Dalil Boubakeur, after meeting with President Francois Hollande.
Boubakeur, speaking in the name of French Muslims, voiced his “deep grief” at the attack which he descrbed as a "blasphemous sacrilege which goes against all the teachings of our religion.”
EU to help France fight against IS barbarity
The head of the European Commission pledged “Europe's solidarity and cooperation in the fight against barbarity”, in a letter to French President Francois Hollande after a church attack claimed by the Islamic State armed group.
“More than ever, all over Europe, solidarity and cooperation will be essential in the fight against barbarity and to ensure that our shared values prevail,” Jean-Claude Juncker wrote.