The suspect, 32-year-old Eduardo Sencion of Carson City, also shot himself and later died at a hospital. Seven people were wounded in the attack at a strip mall near a casino and department store in the state's capital.
The gunman's motive was unclear, but authorities are investigating whether the military members were targeted. The two Guardsmen killed were men; another woman also was shot and killed.
Carson City Sheriff Kenny Furlong said Sencion entered the front doors of the IHOP and traveled "all the way through the restaurant to the back area" before opening fire.
"Obviously with five out of the 11 victims uniformed National Guardsmen, that has taken a priority interest in our investigation," Furlong said.
Sencion worked at his family's business in South Lake Tahoe, he was not in the military, and he had no known affiliations with anyone at the restaurant, Furlong said. He also had no criminal history.
Sencion's family raised concerns about his mental health in interviews with investigators, Furlong said. He did not elaborate.
Sencion filed for bankruptcy protection in January 2009. His former lawyer in Carson City and Reno, Joe Laub, said he was surprised to learn Sencion was identified as the shooter.
He called the shooting an "aberration of his character."
"He's a gentle, kind man who was very helpful to friends and family," Laub told The Associated Press. "I couldn't venture to guess what would cause him to do something as horrible as this."
The owner of a nearby barbecue restaurant described a frantic scene in which the gunman pulled up and immediately shot a man on a motorcycle, then charged into the IHOP, where the Guard members were meeting.
Ralph Swagler said he grabbed his own weapon, but said it was too late to stop the shooter.
"I wish I had shot at him but he was going in the IHOP," said Swagler, who owns Locals BBQ & Grill. "But when he came at me, when somebody is pointing an automatic weapon at you - you can't believe the firepower, the kind of rounds coming out of that weapon."
Nevada officials first worried about the violence being more widespread. They locked down the state Capitol and Supreme Court buildings for about 40 minutes, and put extra security in place at state and military buildings in northern Nevada.
"There were concerns at the onset, so we took certain steps to ensure we had the capability to embrace an even larger circumstance," Furlong said. "At this point in time it appears to be isolated to this parking lot."
The IHOP is about four miles from the Guard's headquarters complex. Nevada National Guard spokeswoman April Conway said she didn't know why the five Guard members had met at the IHOP.
At a Reno hospital, service members gathered, waiting for word on those killed and hurt. A hospital spokesman said four shooting victims were being treated there, but wouldn't discuss their conditions or provide any other information.
"You go a whole tour in Afghanistan and no one is shot. And you go to IHOP and several are shot," said 31-year-old Sgt. First Class Cameron Anderson of Reno, a Nevada Army National Guard member. "It's a shock. I came to work today and had no idea I'd be driving the chaplain here (to the hospital.)"
Another Guard member, 33-year-old Spc. Lee Amato, said he didn't know the victims' names but expected they were people he knew.
"It's hard to believe something like this would happen to really good people," Amato said. "It's like a hole, something taken away. It's mind-boggling and hard to comprehend."
At the scene of the attack, police interviewed dozens of witnesses and kept the gathering crowd of media at bay. A body lay on the ground, covered with a white sheet except for the feet, clad in tan boots.
The gunman pulled up to the IHOP in a blue minivan around 9 a.m. in a minivan registered to his brother, Furlong said. Witnesses said he unloaded a clip before he got even 12 feet from his car.
Fran Hunter, a regular customer at that IHOP, decided to eat breakfast across the street at a coffee shop inside the Casino Fandango.
"If you know the IHOP, they had to be sitting ducks with that long narrow aisle - if they were at those tables with no way to get out," said Hunter, who works at a pet supply store in the strip mall.
"Those people never stood a chance," Hunter told The Associated Press.
Once he exited the restaurant, Furlong said the gunman got into a vehicle and drove around in circles. He fired shots toward the barbecue restaurant, shattering the windows, and at an H&R Block and a casino across the street.
Officers responded to calls reporting the gunfire within minutes, Furlong said. The suspect was wounded and lying in the parking lot when they arrived at the scene, he said.
The person who was shot on the motorcycle also was alive when officers arrived, and was transported to a hospital.
Furlong says they're analyzing the weapon to determine whether it is automatic or semi-automatic.
Nevada's capital city of some 50,000 is normally a sleepy town when lawmakers are not in session, a jumping off point 30 miles south of Reno for travelers headed to Lake Tahoe or back to California across the Sierra.
"I don't know what's happening to my city," Fran Hunter, who works at the Sierra Le Bone pet shop just north of the IHOP, told the Reno Gazette-Journal. "This happens in L.A. or Las Vegas but not here."
Associated Press writers Michelle Rindels, Ken Ritter and Oskar Garcia in Las Vegas; Martin Griffith in Reno; and Scott Sonner in Carson City contributed to this report.