A boy, believed to be aged 12, witnessed the fatal shooting inside Quakers Hill police station in Sydney's north-west, police say.
'Large knife' located at Quakers Hill shooting
A man is shot dead by an officer at Quakers Hill police station after a confrontation in the foyer. Vision courtesy ABC News 24
The boy was at the Lalor Road station when a man carrying a large bladed knife came into the foyer and started yelling incomprehensibly, Fairfax Media understands.
It is understood the man, who police say was aged in his 40s, then lunged towards a senior officer before he was shot in the shoulder just after 10.30am on Tuesday.
Police and paramedics tried to revive him but he died a short time later.
A critical investigation is under way, headed by the NSW Police Homicide Squad.
The station remained cordoned off at 3pm with a blue tarpaulin covering the entrance.
Resident Anthony Omorogue said he did not hear the fatal shot but realised something was amiss when he heard helicopters circling his house.
"The only thing I heard was the noise of the helicopter when I woke up," he said.
NSW Police Assistant Commissioner Denis Clifford said the man was involved in a confrontation with police, during which a police sergeant with 24 years' experience fired one shot at him. The man was yet to be identified, he said.
"We have no idea of [his] motive for coming to the police station," Assistant Commissioner Clifford said.
"I can say that there's no indication that this is terrorist-related, but why the man came there, why the confrontation [occurred], at this stage we just don't know.
"A large knife has been located at the scene, and obviously that will be part of the investigation.
"We are trying to establish his identity and then in turn speak to relatives."
Assistant Commissioner Clifford said the officer who shot the man was "very distressed" after the incident. A number of police officers and at least one member of the public were in the area where the shooting occurred, he said.
The CareFlight helicopter landed near the shooting scene just after 11am, while a PolAir police helicopter was also circling the area.