Earlier Friday, Bend police served a search warrant at the home and seized illegally possessed guns, heroin and methamphetamine, troopers said.
"When the officers arrived, one officer encountered a man exiting the back of the residence," OSP said in a news release Saturday afternoon. "The man was shot during the encounter with the police officer."
Medical aid was provided at the scene by officers and responding medics from Bend Fire and Rescue.
The 31-year old man, who was not a resident of the home, was taken to St. Charles-Bend, where he was pronounced dead, troopers said.
Following standard Bend police policy, the officer involved in the shooting has been placed on paid administrative leave. The officer's name also has not been released.
No other information is being released at this time, troopers said.
Neighbors expressed shock at the turn of events, though some said police had been watching the home for months.
"It's really scary," said neighbor Jennifer Gobeille, who said they "heard a sound like a crack" that apparently was the gunshot.
"My kids ride their bikes up and down the street every day," she said. "I mean, we've had interactions with the people that live in this house. It really hit close to home. It kind of made me think, you know, what do we need to do? Do we need to be on guard? Should I be afraid?"
This was the first fatal officer-involved shooting involving Bend police in 5 1/2 years.
In May 2008, Detective Tom Brown, a 14-year Bend police veteran assigned to the Central Oregon Drug Enforcement Team, shot and killed Refugio Cruz-Fuentes, 28, in a vehicle in the driveway of a home on NE Wichita Way during a drug raid.
Authorities said he appeared to be reaching for a weapon, but no gun was found on him or in the vehicle. District Attorney Mike Dugan later ruled the fatal shooting was justified, citing several factors, including the shooting victim's position in the car.