The hours-long drama saw Burkinabe troops, backed by French special forces, battle militants -- including two women fighters -- who stormed the four-star Splendid Hotel, which is popular with foreigners and United Nations staff, and took more than a hundred people hostage.
Burkina Faso declared three days of national mourning following the attack, which mirrored another Al-Qaeda attack on a luxury hotel in neighbouring Mali where 20 people were killed, mostly foreigners.
"The Burkinabe nation is in shock," President Roch Marc Christian Kabore, who took office just last month, said in a radio and television address.
"For the first time in its history, our country has fallen victim to a series of barbaric terrorist attacks," he said, adding that the people of Burkina would nevertheless "emerge victorious".
The attack began around 7:45 pm on Friday when an unknown number of attackers stormed the 147-room Splendid Hotel in the heart of Ouagadougou.
An AFP reporter saw three gunmen wearing turbans firing on Avenue Kwame Nkrumah, one of the city's main thoroughfares. Another witness reported seeing four assailants.
The hotel and its surrounding area turned into a battleground as Burkina Faso troops, backed by French forces based in the city under a regional counter-terrorism initiative, launched an attempt to retake the hotel around 2:00 am.
A total of 29 people were killed in the attack on the hotel and a nearby restaurant, including six Canadians, two French and two Swiss nationals as well as an American.
Interior Minister Simon Compaore said the bodies of three "very young" jihadists had been identified, all of them men. A security source said earlier that at least four attackers had been killed, two of them women.
Al-Qaeda in the Islamic Maghreb (AQIM) has claimed the attack on behalf of an affiliate, saying the strike on the former French colony was in "revenge against France and the disbelieving West", according to a statement carried by US-based monitoring group SITE.
AQIM said the gunmen were from the Al-Murabitoun group of notorious Algerian extremist Mokhtar Belmokhtar.
The attack will heighten concerns that jihadist groups are casting their net wider in search of targets in west Africa, two months after the hotel siege in Mali.
The US, which has a small military contingent in Burkina Faso, meanwhile said it supported French forces in the operation to retake the Splendid Hotel.
Several guests managed to escape from the hotel through side entrances, including labour minister Clement Sawadogo, who emerged unscathed.
Campaore said 10 bodies were discovered on the terrace of the Cappuccino restaurant, which lies next to the hotel.
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