St Anthony Police interim police chief Jon Mangseth said the incident began when an officer pulled over a vehicle at around 9pm on Wednesday in Falcon Heights, a St Paul suburb.
Mangseth said he did not have details about the reason for the traffic stop, but that at some point shots were fired.
The man was struck but no-one else was injured, he said.
As word of the shooting and video spread, relatives of the man joined scores of people who gathered at the scene of the shooting and outside the hospital where the man died.
He was identified as Philando Castile of St Paul, a 32-year-old cafeteria supervisor at a Montessori school.
Speaking to CNN, Castile’s mother said she suspected she would never learn the whole truth about her son’s death.
“I think he was just black in the wrong place,” Valerie Castile said, adding she had underlined to her children that they must do what authorities tell them to do to survive.
Police have not released details on the ethnicity or service record of the police officer involved but say he has been placed on paid administrative leave.
“I know my son. We know black people have been killed. I always said: ‘Whatever you do when you get stopped by police, comply, comply, comply’.”
Police use of force, particularly against minorities, has returned to the national spotlight since the video-recorded fatal shooting earlier this week of 37-year-old Alton Sterling by police in Baton Rouge, Louisiana.
The US Justice Department on Wednesday launched a civil rights investigation into the shooting, which took place after Sterling, who was black, scuffled with two white police officers outside a convenience store.
Castile’s cousin, Antonio Johnson, told the Star Tribune that he believed that because Philando Castile was a black man driving in Falcon Heights, a largely middle-class suburb, he “was immediately criminally profiled and he lost his life over it.”
The site of the shooting in Falcon Heights is close to the Minnesota State Fairgrounds and not far from a clutch of fields associated with the University of Minnesota’s agricultural campus.
Late on Wednesday, protesters moved to the governor’s mansion in nearby St Paul, where around 200 people chanted and demanded action from Democratic Governor Mark Dayton.
Dayton’s spokesman didn’t immediately respond to media inquiries.
The video posted on Wednesday night on Facebook Live appears to show the aftermath of a shooting like the one described by Mangseth.
It shows the woman in a car next to a bloodied man quietly slumped in a seat.
The woman describes being pulled over for a “busted tail light” and her boyfriend being shot as he told the officer that he was carrying a pistol and was licenced.
A clearly distraught person who appears to be an armed police officer stands at the car’s window, telling the woman to keep her hands where they are and intermittently swearing.
Mangseth said he was “made aware there was a livestream on Facebook” but that he had not yet seen the video and didn’t know anything about its contents.
The woman in the video says the man she identified as her boyfriend was reaching for his ID and wallet when the officer shot him.
Police said in a statement that a handgun was recovered from the scene.
The officer tells her to keep her hands up and says: “I told him not to reach for it. I told him to get his hand out.”
“You shot four bullets into him, sir. He was just getting his licence and registration, sir,” the woman responds.
The video goes on to show the woman exiting the car and being handcuffed.
A young girl can be seen and is heard saying at one point, “I’m scared, Mommy.”