Detectives from DPS and the Yavapai County Sheriff's Office have been on the scene all day.
Investigators are still piecing together exactly what led up to the shooting.
It happened in a small community called the Verde Villages in Cottonwood.
The Arizona Department of Public Safety says the deputy was not shot but was injured in the scuffle.
"Scared to death that it's so close to my neighborhood," said a resident.
DPS says a suspect was shot and killed following a physical fight with the YCSO deputy.
"It was alarming this morning, hearing all the sirens," said the resident.
Shots rang out in the neighborhood near Yuma Circle Drive around 4 a.m. Saturday.
The deputy pulled over a Jeep SUV for a traffic violation with six people inside. One of the men ran from the jeep and DPS says one of the deputies chased the man. Then moments later dispatch received a report from one of the deputies of shots being fired.
"My son heard the gunshots, I didn't hear them because I sleep with earplugs in, he came and heard them, and I was like that's really close," said a resident.
The injured deputy was taken to the hospital with non-life threatening injuries, he's since been released.
"That's terrifying, I come from Atlanta, and that's a big city, this is supposed to be a small town, it's not supposed to happen here," said the resident.
DPS and YCSO have not released the names of the officers involved, or the name of the man who died.