UPDATED 9.28pm A former New Zealand student who built a bomb used in an Isis suicide attack was allegedly inspired by a close friend’s death.

Taie bin Salem bin Yaslam al-Saya'ari was gunned down by police in Saudi Arabia on Sunday.

Authorities say he planned an attack last year at one of Islam's holiest sites, manufacturing a bomb used in the July 4 suicide attack outside a mosque where the Prophet Muhammad is buried which killed four Saudi security force members.

After shooting Al-Saya'ari over the weekend police found two explosive belts, two machine guns, a home-made grenade and basins filled with chemicals.

The Saudi man is believed to have lived and studied in New Zealand between 2008 and 2013.

The country's Interior Ministry said he quit his university studies in New Zealand, to go to Syria to fight in its civil war. He then went to Turkey, Sudan and Yemen before ending up back in Saudi Arabia.

His former friend Homoud Alsalem told Fairfax Al-Saya'ari left in 2013 to join ISIS and fight Bashar Assad's regime in Syria, after about a year of expressing increasingly radical beliefs.

"One year before he left he changed - became more isolated, more religious, more enthusiastic about the Syrian revolution.

"He would watch the news all the time about it. He became enthusiastic, sympathetic with the jihadists."

"Another student studying in New Zealand went to Syria and got killed as part of the Islamic State. I think that shocked him, and made him sympathise with the jihadists more."

Alsalem said he met Al-Saya'ari through mutual friends and knew him for several years.

"He was by far the smartest Saudi student I knew in New Zealand,” Alsalem told Fairfax. “I would see him in the library teaching other Saudis - he was a leader in his field.

"He was a moderate and charming guy. He was smart enough to know that this was quite wrong."

Alsalem said if a student as smart as Al-Saya'ari could be radicalised it could happen to anyone. 

"He's not just any guy. If this could happen to him it could happen to any Saudi."

Saudi Arabia Police have killed a former New Zealand student in a shootout in Riyadh. Officials said he planned a deadly attack on a mosque.

They say Taie bin Salem bin Yaslam al-Saya'ari made a suicide bomb used at the Medina mosque last year.

It's one of Islam's holiest sites and the attack in July killed four security force staff and hurt five others.

Saudi Arabia Police say they killed the former scholarship student over the weekend in a shootout in Riyadh.

The country's Interior Ministry says he quit his university studies in New Zealand, to go to Syria to fight in its civil war. He then went to Turkey, Sudan and Yemen before ending up back in Saudi Arabia.

Police found two explosive belts, two machine guns, a home-made grenade and basins filled with chemicals after their shoot-out.

Immigration New Zealand Area Manager Darren Calder said Al-Saya'ari first arrived in New Zealand in July 2008 and held a series of student visas before leaving New Zealand in November 2013.

"For legal and privacy reasons INZ is unable to make any further comment," he said.