Police said shortly before 4:30 p.m. they were called to a home in the 200-block of Fern about an armed man. When they arrived, a man left the home with a knife in hand.
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The man confronted officers outside in a nearby yard, and during the confrontation police opened fire on him. He was taken to a local hospital where he was pronounced dead.
Three officers were also taken to the hospital for observation, police said.
Police said they had received the 911 call that brought them to the home by the resident, and had been called to the home in the past, but they did not say whether the resident and the suspect had any relationship with each other or whether the man who was shot lived at the home.
The man was identified as Jack Murray, 24, of Chicago, according to the Cook County Medical Examiner's Office.
Neighbors were shaken by the incident.
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"This is an area where people, they do, they stay. They stay a long time. They raise their kids here, and then sometimes their kids buy homes here, and so it's that kind of neighborhood," said resident Barb Labellarte.
Elk Grove Village police are conducting a criminal investigation into the incident but said there is no danger to the public.
The Major Case Assistance Team is investigating the shooting.