Assistant Commissioner Glenn Weir said when police confronted the man, he refused demands to put down his weapon and advanced on officers.
“Two shots were fired and the male was struck,” Mr Weir said.
Police and paramedics rendered first aid, but the man died at the scene.
Mr Weir said he had spoken to the four officers involved, who had been left “extremely shaken” by the event.
“No one goes to work and thinks that they’re going to be placed in that position but they’ve undertaken immediate action following a really serious criminal offence,” he said.
“They’ve taken action as per their training to try and apprehend the offender for a really violent series of offences and what’s happened has happened.”
The officers involved included a sergeant and three senior constables, all from the Baw Baw police district. Mr Weir would not say who had fired, but said the incident was “fairly instantaneous” and confirmed the two shots were fired by one male officer.
“They are very shaken, but I’ve spoken with them and they’ll have plenty of support through the investigation and ongoing to try and deal the trauma they’ll no doubt feel as a result of this,“ Mr Weir said.
The man was known to police before Thursday’s incident.
Mr Weir said the man who was carjacked was not hurt, but it was “fairly terrifying for the owner of the Audi and for the police who were confronted with that male with the knife”.
Detectives from the homicide squad and Professional Standards Command will investigate the incident, and a report will be prepared for the coroner.
A caller to Melbourne radio station 3AW, identified only as Brock, said the man was being chased by police before he collided with an oncoming car.
“He proceeds to get out of his car and run towards my car holding something in his hand,” he said.
“It must have been a weapon of some sort because the police were yelling at him to drop it. He didn’t drop it and was shot twice.”
Brock said police “gave him every opportunity to stop”.
Anyone who witnessed the incident is urged to contact Crime Stoppers on 1800 333 000 or submit a confidential report online at www.crimestoppersvic.com.au.
Catch all the day’s headlines
At the end of each day, we’ll send you the most important breaking news headlines, evening entertainment ideas and a long read to enjoy. Sign up here.
Simone is a crime reporter for The Age. Most recently she covered breaking news for The Age, and before that for The Australian in Melbourne.
Robyn Grace is a journalist at The Age.