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The incident occurred after a fleeing driver dodged road spikes, only to hit a police patrol car soon after and send it smashing into a house in the suburb of Windsor.
Inspector Mike Bowman, the acting area commander for Southland, said in a written statement police had been called to a family harm incident in Invercargill shortly after 10am.
A man at the address was alleged to have threatened people at the house before fleeing in a red Mitsubishi ute, Insp Bowman said.
Police caught up with him soon after, near Grasmere, and laid road spikes in an attempt to stop his vehicle.
The fleeing driver avoided the road spikes and continued driving, followed by police, towards Windsor.
"The fleeing driver has then collided with a police car and as a result of this crash the police vehicle has hit a house, causing significant damage,'' Insp Bowman said.
No-one was seriously injured in the incident. The fleeing driver, a male, was arrested at the scene.
Police were reluctant to answer further Otago Daily Times questions about the incident yesterday.
The Police Media Centre would not say where in Windsor the crash had occurred, although an ODT reporter found the Herbert St scene soon after.
A police cordon kept media back from the house but the red ute could be seen abandoned in the middle of the street.
The damaged police car - and whatever damage it inflicted on the brick house - was largely out of sight, although just visible behind what appeared to be a damaged corrugated iron fence.
A van was also lying on its side on the footpath, but police did not explain its involvement in the incident.
A Police Media Centre spokeswoman would not answer further questions yesterday, including about the extent of damage to the house and patrol car.
Both were still being "assessed'', the spokeswoman said, and police had nothing further to add.