The incident happened after officers were called to a property on O'Donoghue St, in Hillcrest, looking for a person in relation to a firearms matter.
Police confirmed that while they were there, officers were confronted by an armed man and a number of shots were exchanged.
"The man received a gunshot wound and died of his injuries at the scene," Waikato District Commander Superintendent Bruce Bird, said.
No police officers were shot.
All ends of O'Donoghue St are cordoned off, with armed officers at each entry point.
The streets are quiet, with some residents still unaware of what unfolded last night.
A resident on Aurora St - which intersects with O'Donoghue - said he was woken by what seemed a flurry of shots.
"I thought it was fireworks. All I heard was, maybe, nine rapid shots. that's what it seemed like because I was half asleep."
The man said he didn't hear the Eagle helicopter, only the shots which he said seemed to happen in two separate lots; about five or six first then the remainder a couple of seconds later.
A witness at the scene in the early hours of this morning told the Herald that several police in white overalls could be seen walking around what appeared to be a vehicle covered by a tarpaulin.
"Armed police have blocked off the bottom of O'Donoghue St and Hillcrest Rd.
"There were three officers in white overalls walking towards a tarp over a fence line. I think there's a vehicle under it."
About six police vehicles were at the site overnight, he said.
Residents report hearing police yelling
Last night, residents in the area described hearing a "large volley of gunfire" which at least one person likened to fireworks.
A woman named Coralie, who asked that her surname not be used, said among the red and blue lights, she could hear police officers yelling out instructions.
"Armed police, put the gun down! Put your hands out the window, anyone else in the vehicle put your hands out the window!"
Coralie said that was repeated multiple times before a final "they're not moving" and then silence.
Another resident said: "It sounded like they kept shooting but were firing blanks. It was very loud though."
Police are expected to give an update on the situation and the circumstances around the shooting this morning.
Less than a week after another police shooting
Last night's incident comes almost a week to the day a police officer was shot during a routine stop in Hamilton.
A 23-year-old man has since been arrested after the officer was shot in the shoulder and arm on Bankwood Rd late last Friday night.
The officer has since undergone surgery.
