Quebec provincial police, who are investigating the shooting under provincial protocol, said seven Montreal police officers involved in the incident were taken to hospital and treated for shock.
"After they are treated, the officers will meet with our investigators to get their version of events," said Sgt. Martine Asselin, a Quebec provincial police spokeswoman.
The incident began shortly before 11 a.m. when reports came in on Montreal's 911 emergency line that a man in his early 40s was threatening people near the city's main bus terminal.
Montreal police said before the case was turned over to provincial officers that the man was still holding the blunt object in his hand when Montreal police arrived.
Montreal police said the suspect refused to surrender and police opened fire when he allegedly tried to strike an officer.
The suspect, who has not yet been identified, died later in hospital.
Quebec provincial police took over the investigation and confirmed the suspect had a hammer in his possession.
Asselin said that she could not confirm a report that a Taser was requested on site but never made it to the scene. Montreal police would not confirm that report either.
"I've heard this reported but I can't confirm anything for now," Asselin told reporters at the scene.
The provincial force is hoping to view surveillance tapes from the area that might have captured what transpired.
Provincial police are investigating their Montreal counterparts under protocol that forbids a police force involved in a death from investigating itself.