Investigators said the officer was walking her corgi on a leash near 29th Street and Normal Avenue in Bridgeport April 21, when her 68-year-old neighbor's mixed-breed pit bull slipped out the front door. The two animals got entangled.
COPA said just as the owner of the escaped dog was regaining control, the officer shot and killed that animal.
COPA is recommending that the Chicago Police Department look at whether the officer should be put on administrative duties or be relieved of powers during the investigation.
COPA noted in its report that the neighbor's head was "inches away" from the gunshot.
No citations were issued in the incident, Chicago police said.
The officer's neighbor also filed a federal lawsuit, which alleges a cover-up.
It also alleges the neighbor was asked to move out of his apartment a week after the shooting, based on "defamatory statements."
A hearing on the lawsuit is scheduled for Aug. 6.
Anyone with information or video related to the incident is asked to call 312-746-3609 or visit ChicagoCOPA.org.
Sun-Times Media contributed to this report.