"He had a knife or a machete. When we arrived, this person disappeared into an apartment," Stockholm police spokesman Lars Byström told the TT news agency.
The man then stood on the balcony of the apartment and threatened police.
"He screamed at police from the balcony that he wanted to kill them," a neighbour told the Expressen newspaper.
Negotiators were called in and police subsequently learned that a woman was also in the apartment. After negotiations failed to yield any results, police then decided to break down the door and storm the flat in hopes of securing the woman's safety.
"Then the person in question appeared holding a machete. Officers felt cornered and threw a flash grenade so they could overpower the man. That didn't work either and they then felt forced to open fire," said Byström.
It's unclear how many officers fired shots and exactly how many shots were fired, but according to witnesses, police fired five or six shots before things went silent.
"We saw the flashes when they shot. Even if you'd never sees an actual shooting before, you knew what it was," a witness told Expressen.
The 69-year-old man was taken to hospital where he was pronounced dead from his gunshot wounds.
The woman in the flat escaped the incident without sustaining any physical injuries, according to police. The woman's relationship to the man remains unknown.
The incident is now under investigation by prosecutors from the Swedish National Police Crimes Unit (Riksenheten för polismål).