Lachan Kelly-Tumarae, 19, of Flaxmere in Hastings, was shot by an officer with a standard issue Glock pistol in nearby Fernhill around 1.30am and died in hospital about 3am.
The incident happened after a Napier police night shift patrol noticed Mr Kelly-Tumarae acting suspiciously near a vehicle parked on Wordsworth Cres in suburban Maraenui.
He pointed a shotgun when approached and police immediately retreated, eastern district commander Superintendent Sam Hoyle said.
He then drove away to Fernhill on the outskirts of Hastings in a relative's Nissan Primera station wagon and was followed at a distance by several police cars with flashing lights.
Mr Kelly-Tumarae stopped abruptly and got out of his car on Taihape Rd, near the intersection with Korokipo Rd, where he again pointed the shotgun at police.
Mr Hoyle said early indications were that Mr Kelly-Tumarae appeared to have fired the gun before he was shot by an officer.
Officers immediately attempted first aid before Mr Kelly-Tumarae was taken to Hawke's Bay Regional Hospital by ambulance, where he later died.
"We are still working to ascertain where the shots were directed and how many were fired," Mr Hoyle said.
"There were a number of staff at the scene and we need to speak to everyone who was there and complete forensic examinations to get a concise picture of what took place. That is likely to take some days."
The homicide investigation would look into shots fired by both the offender and police.
Asked if only one policeman had been armed, Mr Hoyle told Radio New Zealand only one officer fired shots.
"There were other weapons there in the cars. Exact details about which other officers had armed themselves from their vehicles, we'll find out when the investigation is completed."
The man was "not at all" cornered, Mr Hoyle said.
"He had a number of options open to him including keeping on driving."
Mr Hoyle said police would be trying to find out why the dead man was in a suburban Napier street in the early hours of the morning with a gun.
Mr Kelly-Tumarae had had previous dealings with police and the investigation would look into his background, including whether he had gang affiliations.
The officer who fired the fatal shot had not been stood down but his shift had finished.
"We're obviously working to support him and the other officers who had the firearm presented at them," Mr Hoyle said.
"It is traumatic for all the officers involved, having the firearm presented at them and then ending as it did."
Several investigations have begun into the shooting, including an Independent Police Conduct Authority (IPCA) inquiry and a homicide investigation which will be headed by a senior officer from outside the district.
A postmortem examination will be held today to confirm the man's cause of death and a forensic examination of the scene is under way.
Police are appealing for information about a van seen in Wordsworth Crescent when police first approached the offender about 1.30am.
The grey van was driven by a middle-aged man and was carrying a passenger. It was seen coming out of the street and turning into Masefield Ave.
The incident follows three police shooting deaths in recent years.
Halatau Naitoko, 17, a courier, was accidentally shot and killed in crossfire on Auckland's northwestern motorway following the dramatic police pursuit of gunman Stephen Hohepa McDonald in January 2009.
The officer did not face charges, with the judge who sentenced McDonald to 13 years jail agreeing police were not to blame.
Truck driver Richard Neville, who was injured by shrapnel from the shooting as McDonald tried to hijack his truck, is suing police for gross negligence and mental trauma.
Armed drug addict Lee Jane Mettam, 37, was shot dead by a member of the armed offenders squad in Whangarei in October 2008 after she took a shop assistant hostage.
The IPCA found the officer was justified in the shooting.
Christchurch man Stephen Bellingham, 37, was shot dead as he ran towards a police officer with a hammer during a destructive window-smashing rampage in September 2007.
The IPCA found the officer had acted in self-defence.
