Officers immediately gave him medical attention and he was taken by helicopter to Dunedin Hospital in a critical condition, where he later died.

"No police staff were injured," Insp Sweeney said.

"A fatal shooting is an outcome that nobody in the police wants, and nor in the community. But unfortunately this event escalated in front of our people."

Full support is being given to the man's family as well as to the police officers involved, Insp Sweeney said.

Police Minister Stuart Nash said his sympathies were with the family of the man who died.

"The circumstances for his family and the person who made the 111 call would have been frightening and I acknowledge the trauma they are going through," Nash said.

"I also have concerns for the impact on the local police officers and other emergency services who were first on the scene, as well as hospital staff in Dunedin. In any small rural town the community is close-knit and many people will be affected."

The IPCA has been notified of this incident and a critical incident investigation is also underway.

The death will be referred to the Coroner.