The deceased was Rubel Ahmed, 28, son of Shaestha Mian of Goighar village near Sadar upazila.
According to police sources, on a tip-of, a team of police conducted a drive in the area.
At one stage, the criminals swooped on the police with machete leaving four cops injured.
The law enforcers also opened fire in self defense leaving Rubel critically injured while other criminals managed to escape the scene.
Later, he was sent to Moulvibazar Sadar Hospital where on duty doctors declared him dead.
KM Nazrul Islam, officer-in-charge of Moulvibazar police station, confirmed the incident.