The incident comes hours after the U.S. Justice Department said it had opened an investigation into two police officers fatally shooting a black man in Baton Rouge, Louisiana on Tuesday.
The use of force by law enforcement against African-Americans in cities from Ferguson, Missouri, to Baltimore and New York has come under heavy scrutiny.
The St. Anthony Police Department said in a statement an unidentified black man was wounded in an officer-involved shooting during a traffic stop in Falcon Heights, Minnesota at 9 p.m. local time,
The man was taken to the hospital where he later died, police said.
A woman live-streamed what she described as the aftermath of the shooting in a 10-minute video posted on YouTube and briefly on Facebook. Reuters has been unable to confirm the validity of the video.
The video began with the unidentified woman in the passenger seat describing what had happened moments before while a black man covered in blood sat in the driver's seat as a police officer pointed a gun into the vehicle.
The woman said that her boyfriend had just been pulled over for a broken tail light and explained that he had a gun, which he was licensed to carry.
"He was trying to get out his ID and his wallet out of his pocket," she said. "He let the officer know that he had a firearm and that he was reaching for his wallet and the officer just shot him in his arm."
Police said a handgun was recovered at the scene.
Officers told the woman to keep her hands up as a small child is heard briefly crying in the background.
"Fuck. I told him not to reach for it," a distraught man is heard screaming in the video.
The Minneapolis Star newspaper reported relatives and friends identified the man as Philando Castile, 32. Castile was a cafeteria supervisor at a school in St. Paul school district, according to the paper.
"He doesn't deserve this," the woman was heard saying as she cried in the video. "He was a good man."