The prisoners shot themselves inside Kaohsiung city prison in the early morning, the justice ministry said, adding that the prison chief and another senior staffer who were being held after a hostage swap were unharmed.
"We tried to use all kinds of means to persuade them to release the hostages so the incident could come to a peaceful end and to prevent an unfortunate situation. We regret that six people took their lives," said Wu Hsien-chang, chief of the ministry's corrections agency.
The standoff began yesterday when the inmates - jailed for a variety of crimes including murder, robbery and drugs - broke into a weapons storage room, obtained four rifles and six handguns, and took three staff hostage.
They later agreed to release them in exchange for the prison chief and a senior staffer, the justice ministry said.
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Television images showed police armed with rifles and protective gear surrounding the prison. A senior Kaohsiung policeman said more than 250 officers had been mobilised.
The leader of the six was identified by police as Cheng Li-teh, a top member of a notorious triad group known as the Bamboo Union Gang. Sentenced to 28 years for murder, he had been behind bars since August 2012.
Cheng complained that Taiwan's former president Chen Shui-bian - who was sentenced to 20 years for graft - was given parole for medical treatment last month.