French law-enforcement authorities had Hasna Aït Boulahcen in sight long before she surfaced as a suspected accomplice in the Paris terror attacks and died during a police raid. Her phone had been tapped as part of an unrelated drug-trafficking investigation, according to people familiar with the matter.

It wasn’t until days after the Nov. 13 attacks that French authorities learned that Ms. Aït Boulahcen was the cousin of Abdelhamid Abaaoud, a notorious Islamic State operative suspected of directing the terror spree that killed 130, the people familiar with the matter said.

That crucial piece of intelligence, supplied by Morocco, allowed French counterterrorism investigators to track Mr. Abaaoud to an apartment building in a Paris suburb, where Mr. Abaaoud, Ms. Aït Boulahcen and a third person, still unidentified, were killed Wednesday in a two-hour battle with police.

But the late discovery of Mr. Abaaoud’s connection with Ms. Aït Boulahcen has left French investigators stunned, one of the people familiar with the matter said. Mr. Abaaoud, a militant sought for months by French authorities, had a possible accomplice in Paris right under their nose.

“No need to fool ourselves,” a French government official said. “What we have in front of us is a complete failure.”

The intelligence breakdown comes 10 months after the attacks on the Charlie Hebdo satirical magazine and a kosher store revealed a French security operation hobbled by communication troubles among agencies.

As French authorities try again to analyze the cracks in their counterterrorism bulwark, French officials said they needed to better cooperate with allies while improving their capacity to process a welter of information.

The revelation that France was blind to the blood ties between the 28-year-old Mr. Abaaoud, a Belgian of Moroccan origin, and Ms. Aït Boulahcen, age 26, is particularly vexing for France, which has been trying to repair its security relationship with Morocco.

In 2014, a French investigative magistrate promised to probe accusations of torture made by human rights activists against the head of Morocco’s counterintelligence agency. The kingdom rejected the allegations and responded by severing all security cooperation with France, its former colonial ruler.

French President François Hollande’s visit to Morocco two months ago helped clear the air and restore security cooperation, officials said.

On Friday, after meeting in Paris with Morocco’s monarch, Mohammed VI, Mr. Hollande expressed France’s gratitude for the “efficient assistance” the country provided after the Paris attacks. A spokesman for Mr. Hollande and an official at Morocco’s Interior Ministry declined to comment.

One of the challenges facing French intelligence is tracking the movement of hundreds of French radicals passing over Turkey’s border with northern Syria, Islamic State’s stronghold, and identifying significant threats.

French investigators are concerned they may have overlooked a clue supplied by Turkey in December 2014: Two Frenchmen, Omar Mostefai and Samy Amimour, had crossed together into Syria with a third person a little more than a year earlier, said Turkish officials and other people familiar with the matter.

That piece of intelligence confirmed suspicions by French authorities that Mr. Amimour, a former bus driver with an international arrest warrant, had joined with Islamic State.

But French security services, apparently confident that Mr. Mostefai—on a security watch list since 2010 for his alleged radical beliefs—had returned home to France in April 2014, didn’t thoroughly explore the connection between Messrs. Mostefai and Amimour, the people familiar with the matter said.

The two men and a third militant assaulted the Bataclan concert hall on Nov. 13, killing 89 people. “It’s possible we thought Mr. Mostefai had returned when he hadn’t, or that he did return but left again afterward,” one of the people familiar with the matter said.

France also wasn’t looking for Mr. Abaaoud in the right place.

French officials said they began regarding Mr. Abaaoud as a serious threat at the start of the year, when Islamic State taunted European authorities over the bloc’s intelligence and security gaps. In a purported interview with Mr. Abaaoud, Islamic State’s official magazine, Dabiq, quoted him boasting about the ease of returning to Europe from Syria to organize a plot to kill police.

That plot was foiled, and Mr. Abaaoud is believed to have escaped back to Syria.

This fall, Mr. Abaaoud’s name was added to a list of Islamic State militants that France wanted to eliminate, possibly through airstrikes, after former members of the extremist group detained in France said he was determined to attack France, according to French officials.

Mr. Abaaoud was at first located in Syria, but his track was lost a few weeks before the Paris attacks, a Western security official said.

French officials now believe Mr. Abaaoud sneaked into Europe through Greece in early October, people familiar with the matter said. He passed through Greece around the time that two of the suicide bombers who later attacked the Stade de France sports arena posed as migrants on the Greek island of Leros, these people said.

On Friday, French officials said they learned on Nov. 16, three days after the attacks, that Mr. Abaaoud had been spotted in Greece.

While Mr. Abaaoud and his accomplices were headed to Paris, French police were keeping tabs on Ms. Aït Boulahcen in the drug probe.

On Nov. 16, having learned about her family connection with Mr. Abaaoud—their mothers are sisters—French counterterrorism services tapped her cellphone, the people familiar with the matter said. Then French authorities realized Ms. Aït Boulahcen was already on their radar, the people said.

Tracking Ms. Aït Boulahcen led French police to the apartment in the northern Paris suburb of Saint-Denis where Mr. Abaaoud was hiding.

During the police raid, an officer was heard asking: “Where is your friend?” A woman, believed to be Ms. Aït Boulahcen, replied: “He’s not my friend.”