The 41-year-old man was shot on Monday night in Alafors, north of Gothenburg, after witnesses reported hearing gunshots in the area.
When police arrived, they found two men in the woods nearby who went on an armed attack against the officers.
One of the two policemen on the scene then fired an unknown number of shots, and one of the suspects was hit.
Police orginally said that the victim was only "seriously injured", but reported on Tuesday morning that he died at the scene.
Details remain unclear, but police said the deceased man may have been firing his own weapon in the air before police arrived. No one else has been reported injured.
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The second man has been arrested and is under the suspicion of attempted murder with the alternative of attempted aggravated assault.
The police officer who fired the fatal shot will be subjected to an internal investigation.