Emergency service teams and military units stormed the building after small explosives were set off. The scenario involved dummies and real people playing hostages and suspects.
"We want it to look extremely real, we want it to smell real," said Alameda County EMS paramedic Jim Morrissey. "We want this place to explode with excitement and adrenaline, and that's how you make real training."
Morrissey said emergency responders call it "training in the red zone."
The exercise ends on Monday at 6 a.m.
The exercise, called Urban Shield, is the largest tactical exercise in the country. Urban Shield gives teams from around the world the experience they need to deal with large-scale disasters.