Trooper Paul G. Richey, a 16-year veteran, and another trooper arrived at the home at about 11:30 a.m. when a shot was fired from inside, killing Richey.
"Trooper Richey sacrificed his life rather than swerve from the path of duty," state Police Commissioner Frank E. Pawlowski said in a statement. "We will not forget his service or his sacrifice."
Richey, 40, of Franklin, is survived by a wife and two young children.
The shooting happened in a rural, heavily wooded area outside Oil City, about 80 miles north of Pittsburgh. Dozens of state police cruisers, many unmarked, quickly converged on the area and remained there hours later blocking roads and searching cars.
At about 6:15 p.m., a police team entered the home and found the body of the suspect and his wife.
"At this point, we have the suspect who we believe is responsible for this, the suspect's wife and the trooper," Sgt. Mark Zaleski said Wednesday evening.
Police did not immediately release the name of the suspect or his wife. However, officers during the day had been showing motorists the driver's license picture of Michael Smith, who lives on the road where the shooting occurred.
Paul Solle, 83, who lives about three-quarters of a mile from Smith's home, said hundreds of officers were in the area. He said he was heeding their advice to stay inside, where he was watching coverage of the shooting on TV.
Solle said he knew who Smith was but didn't know him well. "He just seemed like an average guy to me," Solle said. "The neighbors don't associate here, not that they don't get along, it's just that they do their own thing."
Earlier in the day, a high school and elementary school were on lockdown, though children were being taken home two busses at a time or allowed to leave if their parents picked them up.
Clarion University's Venango campus also was put on lockdown. On its Web site, the university cautioned students to avoid the area or "secure yourself in a safe place and wait for police."
Gov. Ed Rendell called the shooting a tragedy and ordered flags on state buildings be flown at half-staff in honor of Richey.
Richey is the 93rd member of the state police to be killed in the line of duty. His death comes about seven months after the agency's last fatal shooting. Trooper Joshua D. Miller was killed in June during the rescue of a kidnapped child in Monroe County.