The agent was sitting in a vehicle at 6:09 a.m. in the 3000 block of Ezekiel Avenue when several people, including a male armed with a handgun, approached the vehicle, according to a statement from Zion police.
When officer arrived on the block they found a man wearing a bandana over part of his face, who had been shot to death on the street.
Police said the agent had shot the man after he allegedly displayed a handgun, and the rest of the group he was with ran away.
Plain-clothes police officers circled the home throughout the day, and two of them stood guard on a set of stairs leading to a second story apartment. Others faced the back yard.
"I saw the police walking in the other house and I'm like, 'What are police doing in the house?' Asking what's going on," said neighbor Violet Betacourt.
The home now appears to be the focal point of an investigation led by Illinois State Police.
"The investigation is currently an open and ongoing investigation and is at its beginning stages, therefore we cannot release any further details regarding the shooting at this time," state police said in a statement.
State police said no Zion officers were present at the time of the shooting.
"The only thing I notice in that house: they rent the second floor and the third floor. The owner lives downstairs, and the last month I saw a few guys walking late like, nine o'clock, eight o'clock, and coming, and I just really worry because I have a daughter here and she's 19 so I really worry about that," Betacourt said.
Police have not offered any further details about the incident or investigation.
The Sun-Times Media Wire contributed to this report.