The firearms officer - code name C2 - told the inquest into the Brazilian's death he was convinced Mr de Menezes was a suicide bomber about to detonate a device.
Giving evidence for the first time, C2 said his gun jammed and he had to reload while putting six bullets into the electrician's head as a colleague pinned him down.
He said a surveillance officer had positively identified Mr de Menezes as failed bomber Hussain Osman, telling the firearms team: "This is definitely our man" as they followed the victim after he boarded a bus towards Stockwell, south London.
The witness described hearing an order to "stop him getting on the Tube, he must not get on the Tube", over his police radio after Mr de Menezes, 27, left the bus.
He said: "I believe this was a relayed instruction from the designated senior officer and that this suspect was a suicide bomber who had entered the Tube in order to blow up a train."
C2 said he leapt over the ticket barrier at the station, ran down the escalator and was directed by surveillance officers onto the Tube train where Mr de Menezes was sitting.
He added that he did not issue a warning immediately because "if I shouted 'armed police' too early then he would be alerted to our presence, possibly he could initiate a device".
The marksman described how he stood just behind officer C12 as Ivor the surveillance officer pinned Mr de Menezes to the seat of the carriage, creating the risk of a "blue-on-blue" hit.
C2 told the jury: "At the time I fired I believed that I, and everyone else, was about to die.
"From my position I knew that I could not access the brain stem. I could not be certain that of immediate incapacitation."
He said: "I ran forward, I reached over the top of the surveillance officer and I pushed him down.
"I shouted 'armed police' and I held my handgun to the head of the subject and I fired."
"I was this close because I did not want to shoot the surveillance officer and there were other civilians on the carriage. I just could not afford to miss."
Asked why he shouted a warning so late, he replied: "I realised there were members of the public and they should know it was police officers."
He said he fired six shots because he feared he had lost rounds when the gun jammed, forcing him to reload by hand.
C2 told the jury: "I had to ensure that life was extinct also because of the fact I had a stoppage."