The shooting happened around 5:34 a.m. in the 10800-block of Campbell Avenue in Morgan Park. It was just starting to get light outside.
The officer - who has not been identified- was getting in his car near 109th Street and Campbell to head to work when a group of suspects approached with guns, blocking him, according to Alderman Matt O'Shea.
More than a dozen shots were fired in the ensuing shootout.
"Luckily the off-duty police officer, a neighbor and a friend, is OK," O'Shea said. "But this is just another reminder - I don't care what neighborhood you live in. We are in a very safe neighborhood. This type of crime is becoming more and more prevalent."
Neighbors said they heard the gunshots on early Tuesday morning.
"It amazes me how people just stop cars and shoot. I just don't understand it," neighbor Pat Poynton said.
"It was something I've never heard before," said Mary Sheridan, who lives nearby. "Maybe on TV, gunfire, but never in-person."
Sheridan said she saw the suspect's car speeding away after the shooting, traveling east down 109th.
"I knew it wasn't a firecracker," she said.
The suspect's dark-colored sedan was found shot out, as Chopper 7 showed, about a mile away, on 112th Street.
Chicago police said they took one person into custody, but are searching for others.
No injuries were reported.
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But the exchange of gunfire in their neighborhood, which is filled with police officers and firefighters, worries nearby residents.
"This could've been a nurse headed to the hospital; this could've been a teenager, heading out to a summer job," O'Shea said.
"I'm nervous about that. Just like the girl that came out next-door to me, she leaves her work at that time every day," Sheridan said. "She was just going to work, too. People getting up, going to work, and that's what that guy was doing. So, we're all going to be on-guard now, I guess, which is too bad."
Police are asking neighbors to check their cameras for any video of the suspects.
They remained on the scene investigating hours later. The officer's car remained on the scene, too.
"The idea that an off-duty police officer this is happening to is a blessing, I suppose," neighbor Jim McAteer said.
O'Shea said he believes it was the same group of suspects, who may have been involved in several other crimes overnight across the district.
He said he knows the 25-year Chicago police veteran involved in the shootout well. The officer is very involved in the community.
"Luckily, it was a trained member of law enforcement there able to protect himself," O'Shea said. "People are scared and angry, and they should be."
The Civilian Office of Police Accountability, also known as COPA, is investigating the shooting.
The officer involved was placed on routine administrative duties for at least 30 days.
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