The incident took place exactly one year after deadly Islamist militant attacks on the Charlie Hebdo satirical magazine in the French capital and also just minutes after President Francois Hollande had given a speech in an another part of Paris to mark the anniversary.
"The man may have been wearing something that could be a suicide belt," Interior Ministry spokesman Pierre-Henry Brandet told BFM TV. Brandet later confirmed to Reuters that the suicide belt was fake.
France has been on high alert ever since the shootings last January at the Charlie Hebdo office and at a Jewish supermarket in which 17 people died over three days.
Security concerns were further heightened in November, when 130 people were killed in the capital in coordinated shootings and suicide bombings that targeted a music hall, bars and restaurants and a soccer stadium.
ISIS, the militant group that controls swathes of Iraq and Syria, claimed responsibility for the November 13 attacks. Several of the militants involved in those attacks were, like last January's killers, French-born.
In today's incident, the man tried to force his way into the police station in the 18th district in northern Paris, an area that ISIS said it had been planning to hit as part of the November attacks.
"According to our colleagues, he wanted to blow himself up," an official at the Alternative Police union said. "He shouted Allahu Akbar and had wires protruding from his clothes. That's why the police officer opened fire."
Officials said bomb disposal experts were on site.
Journalist Anna Polonyi, who could see the outside of the police station from the window of her flat, posted photos on social media that showed what appeared to be a bomb-disposal robot beside the body.
She told Reuters that her sister, in the flat with her, had seen the incident happen. She said the police shouted at the man and that he then started running towards them before they shot him.
Last year's attacks have boosted the popularity of the far-right National Front party ahead of a presidential election due in 2017.
In his speech, Hollande promised to better equip police to prevent further militant attacks.
The president also defended draconian security measures implemented since November that his Socialist government had once shunned.
"Terrorism has not stopped posing a threat to our country," Hollande said, repeating a promise to boost police recruitment and resources.
Since the November attacks, Paris has increased its efforts at striking jihadist groups in Syria and Iraq, becoming the second largest contributor to the US-led coalition against ISIS.
Security measures at home have included a three-month state of emergency during which the police have launched hundreds of raids on homes, mosques, restaurants and hotels.