Officials have not revealed a motive for the killings. Police said the victims are related. Authorities believe Smith and the victims were acquainted, but they didn't provide details of the relationships.
A bystander called police and told them that Smith fled the home in a white sedan. A car chase ensued, leading authorities to the nearby town of Winchester, where Smith and officers exchanged gunfire. Officers shot Smith, and he later died at a hospital.
Police said they found a rifle, shotgun and large hunting knife in Smith's car.
Coroner officials said they plan autopsies on the victims Thursday morning in Bloomington and identities would be released at that time.
Scott County State's Attorney Michael Hill said Smith, of rural Morgan County, had previous convictions for reckless homicide, drugs and bad checks.
Manchester Mayor Ronald Drake confirmed that Smith was his nephew, saying he hadn't spoken to Smith in two years, but he believed his nephew was unemployed. Drake said the last time Smith contacted him was to borrow tools.
In Manchester, yellow police tape surrounded the small one-story brick home where the victims were found. Manchester is a village of about 300 residents located about 50 miles west of Springfield.
"It's a close-knit community," Drake said. "Everybody talks to everybody. ... We enjoy that goes on (in) town. This is just a tragedy for (the) whole town."
The last homicide in Scott County was 20 years ago, in 1993.
Manchester resident Julie Hardwick, 48, said she lives in the same county housing authority complex as the victims. Authorities told her she couldn't return to her home yet because of the investigation, she said.
"The kids were really nice," Hardwick said of the family. "You couldn't ask for better kids."
The Rev. Robin Lyons of Manchester United Methodist Church, one of two churches in the community said, "this shows tragedy can happen anywhere."
Two area school superintendents said they received calls from county sheriffs before 6 a.m. informing them that five people had been shot to death at a house in Manchester and that a suspect was at large.
Superintendent David Roberts of the Winchester School District and Les Stevens of the North Greene Unit District No. 3 both said they immediately canceled classes when they were told of the shootings and that other school districts did the same.
Roberts said the wounded girl is a student at Winchester Grade School and her teacher was with her at the Springfield hospital.
The school will use its own counselor, nurse and other staff members to help students who need to talk, Roberts said. Other area districts have offered to help too.
Roberts said he also will call on area ministers to be available on campus. "I've found that to be helpful in the past," he said.