Police shoot dead knife-wielding man in North Willoughby, on Sydney's lower north shore

Police were called to the North Willoughby street after reports a man was threatening residents. 

A knife-wielding man shot dead by police in Sydney's north shore was "behaving erratically" and "chasing people" before running at officers, NSW Police say. 

Emergency services were called to Alexander Avenue, North Willoughby, just before 11:30am, after receiving multiple calls about a man threatening residents.

Assistant Commissioner Leanne McCusker said the man, aged 41, was "behaving aggressively … approaching neighbours and approaching various homes."

She said when police arrived at the scene, the man began running at officers with two large "chef-style" knives, before one of them fired their gun.

"This resulted in the male being deceased," Ms McCusker said.

She said it was "not clear" what prompted the man's behaviour, or whether mental health was a factor.

When asked whether she was satisfied the use of a firearm was appropriate, the assistant commissioner offered her support to the officers involved.

"With the information that is before me at this stage, and noting the speed at which I understand the person approached police, yes I am."

"Police were there, as we are, to protect the community," she added.

Assistant Commissioner McCusker said the 41-year-old man was known to police but described the past contact as "quite minimal."

Neighbours described the situation as "confronting" and not something they would ever expect in their "quiet suburb."

Mujahid Torwali and housemate Jakelyn Troy live in the home directly behind where the man was shot.

Willoughby resident Mujahid Torwali heard the shooting from his backyard. (ABC News: Lydia Feng )

Mr Torwali said he was walking into the backyard when he heard shouting.

"After 10 or 15 minutes there were the firing sounds," he said.

"And then everything shut up."

Ms Troy described overhearing a commotion, before three gunshots.

"Next thing you know, the helicopters are flying over sleepy little Willoughby," she said.

Jakelyn Troy said she heard a commotion before the gunshots. (ABC News: Lydia Feng)

A critical incident team from the State Crime Command’s Homicide Squad will investigate all circumstances surrounding the man’s death, “including the discharge of a police firearm”.

The investigation will be subject to an independent review and a report will be prepared for the coroner.