Protesters burned several stores and threw rocks at police in the city's north side, leaving one officer injured. Smoke and orange flames filled the night sky.
The incident started Saturday afternoon when two officers stopped two people who were in a car in the north side, according to the Milwaukee Police Department.
Shortly after, both car occupants fled on foot as officers pursued them, police said.
During the chase, an officer shot one of the two -- a 23-year-old man who was armed with a handgun, according to authorities.
"He (officer) ordered that individual to drop his gun, the individual did not drop his gun," Milwaukee Mayor Tom Barrett said. "He had the gun with him and the officer fired several times."
The man died at the scene. It's unclear whether the second occupant of the car is in police custody.
'All-out-effort' to restore order
Hours after the shooting, a large crowd turned out to protest later that night. Some demonstrators threw objects at police cars, leaving one officer hospitalized after a brick struck him in the head, the mayor said.
Some protesters set buildings ablaze, including a gas station, a beauty shop, a bank and an auto shop.
Three people who were in the gas station rushed out before it went up in flames, the mayor said.
Go home, mayor pleads
As the chaos escalated, authorities implored the crowds to disperse and go home. Some used social media to urge others to come out and take part in the protests, according to Barrett.
"If you love your son, if you love your daughter text them, call them, pull them by the ears and get them home. Get them home right now before more damage is done," the mayor said.
The mayor said police presence will be strong as part of an "all-out-effort" to restore order. At least three people have been arrested, he said.
The shooting occurred near the scene of a double homicide that happened this month. In the related attacks August 9, a man was shot dead while another one was fatally stabbed, police said.
"This is a neighborhood that has unfortunately been affected by violence in the recent past," Barrett said.
"I know this neighborhood very very well. And there are a lot of really really good people who live in this area -- in the Sherman Park area, who can't stand this violence."
At 3:20 a.m. Sunday, police tweeted that they are restoring order and "reducing deployments."
Local officials plan to meet with church and community leaders Sunday to discuss ways to move forward.
Police: Suspect had stolen gun
The suspect, 23, was shot twice -- in the arm and chest, the mayor said. His handgun was stolen during a burglary in Waukesha in March, according to police.
"The victim of that burglary reported 500 rounds of ammunition were also stolen with the handgun," police said in a statement.
The officer, 24, was assigned to District 7 and has six years of service with the Milwaukee Police Department -- three of those as an officer.
He was not injured and will be placed on administrative duty during the investigation and subsequent review by the district attorney's office.
At the time of the shooting, he was wearing a body camera, Barrett said, adding that it was his understanding that it was operational.
By state law, the Wisconsin Department of Justice will lead the investigation.