Officer Brandon Stalker, 24, was providing perimeter security during the standoff in Toledo, Ohio, Chief of Police George Kral said.
"Very sad day for the city of Toledo and specifically the Toledo Police Department," said Kral, who described Stalker as "an amazing police officer."
Stalker, who joined the department in July 2018, leaves behind a fiance and a "very young child," Kral told reporters.
The suspect was also shot but information on his condition was not available.
Kral said officers from the Gang Task Force recognized a suspect who had vandalized a cathedral earlier in the day standing outside of a building in the Fulton Street area of Toledo.
After speaking with the task force members briefly, the suspect went around the corner of a building, pulled out a gun and went into a house, according to Kral.
Officers set up a perimeter and called in negotiators and a SWAT team, Kral said.
After two hours of negotiations, the SWAT team deployed gas. The suspect came out of the house with two guns and started shooting.
"I'm sad to say that Officer Brandon Stalker was struck once and has passed away," Kral said.
The chief did not take questions and said additional information would be provided at a second press briefing Wednesday.
Ohio Governor Mike DeWine ordered that all US and Ohio flags be flown at half-staff upon all public buildings and grounds throughout Lucas County and at the Ohio Statehouse, the Vern Riffe Center, and Rhodes State Office Tower in Columbus in honor of Officer Stalker.
Toledo Mayor Wade Kapszukiewicz said the death of Stalker comes at a dark time for the city. Two other officers have died this year, one in the line of duty on July 4, and another unexpectedly just last week.
"This is a very dark and horrific day for the city of Toledo and it comes at a time when the Toledo Police Department has had to endure too many dark and terrible days in the last 6 months," the mayor said.
"I call on all Toledoans tonight, to say a prayer for their city, and to challenge themselves to respond to today's horrible events with thoughts of love and light," Kapszukiewicz said.
" And perhaps, each in our own way, we can drive out the darkness that we feel in our hearts right now, and provide a brighter path for our police department, our community, our neighborhoods, and everyone who is suffering tonight."