At least 79 were injured while more than 500 students were rescued from the Garissa University College campus, disaster management officials said.
Interior Minster Joseph Nkaiserry said four of the attackers had been killed, and security operations were ongoing.
An overnight curfew has been issued in parts of the country.
Four counties near the Kenya-Somalia border, Garissa, Wajir, Mandera and Tana River, would have dusk-to-dawn curfews imposed, disaster management officials said.
Nine students were critically injured and airlifted to the capital Nairobi for medical treatment, they added.
More than 500 out of 815 students have now been accounted for, the interior ministry says.
Mr Nkaiserry said that "90% of the threat [had] been eliminated", but security forces were "mopping up the area" in case more gunmen were on the campus.
About five masked gunmen are said to have stormed the university early on Thursday morning.
1. Militants enter the university grounds, two guards are shot dead
2. Shooting begins within the campus
3. Students attacked in their classrooms while preparing for exams
4. Gunmen believed isolated in the female dormitories
5. Some students make an escape through the fence
The Kenyan government earlier named Mohamed Kuno, a high-ranking al-Shabab official, as the mastermind of the attack. It placed a bounty of $217,000 (£140,000) on him.
A BBC Somali Service reporter says Mohamed Kuno was headmaster at an Islamic school in Garissa before he quit in 2007. He goes by the nickname "Dulyadeyn", which means "ambidextrous" in Somali.
An overnight curfew has been issued in parts of the country.
Four counties near the Kenya-Somalia border, Garissa, Wajir, Mandera and Tana River, would have dusk-to-dawn curfews imposed, disaster management officials said.
Nine students were critically injured and airlifted to the capital Nairobi for medical treatment, they added.
More than 500 out of 815 students have now been accounted for, the interior ministry says.
Mr Nkaiserry said that "90% of the threat [had] been eliminated", but security forces were "mopping up the area" in case more gunmen were on the campus.
About five masked gunmen are said to have stormed the university early on Thursday morning.
How attack unfolded:
1. Militants enter the university grounds, two guards are shot dead
2. Shooting begins within the campus
3. Students attacked in their classrooms while preparing for exams
4. Gunmen believed isolated in the female dormitories
5. Some students make an escape through the fence
The Kenyan government earlier named Mohamed Kuno, a high-ranking al-Shabab official, as the mastermind of the attack. It placed a bounty of $217,000 (£140,000) on him.
A BBC Somali Service reporter says Mohamed Kuno was headmaster at an Islamic school in Garissa before he quit in 2007. He goes by the nickname "Dulyadeyn", which means "ambidextrous" in Somali.
'Shot on the spot'
Earlier, al-Shabab told the BBC its members were holding Christians hostage and freeing Muslims.
The gunmen reportedly ordered students to lie down on the floor, but some of them escaped.
Student Augustine Alanga told the BBC's Newsday programme: "It was horrible, there was shooting everywhere."
He said it was "pathetic" that the university was only guarded by two police officers.
Student Collins Wetangula said when the gunmen entered his hostel he could hear them opening doors and asking if the people inside were Muslims or Christians, the AP news agency reports.
"If you were a Christian you were shot on the spot. With each blast of the gun I thought I was going to die," he said.
Al-Shabab says it attacked the university because it is at war with Kenya, BBC Africa analyst Mary Harper reports.
Earlier, al-Shabab told the BBC its members were holding Christians hostage and freeing Muslims.
The gunmen reportedly ordered students to lie down on the floor, but some of them escaped.
Student Augustine Alanga told the BBC's Newsday programme: "It was horrible, there was shooting everywhere."
He said it was "pathetic" that the university was only guarded by two police officers.
Student Collins Wetangula said when the gunmen entered his hostel he could hear them opening doors and asking if the people inside were Muslims or Christians, the AP news agency reports.
"If you were a Christian you were shot on the spot. With each blast of the gun I thought I was going to die," he said.
Al-Shabab says it attacked the university because it is at war with Kenya, BBC Africa analyst Mary Harper reports.
Culled From BBC
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