The incident began at about 8.20am on Thursday when police sought the man at an address in Whanganui. Several neighbours reported a man running through properties before hearing two gun shots.
A Bell St resident said she went out into her yard about 8.30am and saw a man standing in her garden with her dog barking at him.
"I think he was talking to our dog or trying to get our dog to shut up," the woman said.
Keith St resident Gordon McMeeken spotted a police officer jumping over his fence with a police dog.
"I opened the door and said, 'Can I help?'" Mr McMeeken said.
The officer told him to go back inside because he would put the dog off the scent.
Police told another resident that "someone had climbed in through my window and run out through the house and gone down here [his backyard] ... because I always leave the back door open.
"It was lucky I wasn't here - I would've got a real shock.
"Everyone's on high tension at this stage because you're not expecting gun shots ... you know, it's not the Lebanon," he said.
Acting District Area Commander Tania Kura said the man emerged from a property on Plymouth St and was challenged by police, at which stage he pointed a handgun at them.
"Two shots were fired at the offender. We now believe he sustained injuries to his leg and his head from these two shots."
Ms Kuru said police gave first aid at the scene. It was a "really traumatic incident" for the police involved, she said.
"This isn't something you come to work to do. It's one of those incidents that really affects everybody - not only those involved, but the staff that support them and all of our colleagues around the country."
Police staff have come from outside the district to help with the investigation, which involves a number of scene examinations. The Independent Police Conduct Authority has also been notified.
"I'm satisfied this incident was managed professionally and appropriately," Ms Kuru said.
Acknowledging the "shock of the community", she emphasised that the shooting was an "isolated incident".
The man appeared before a judge on Thursday and was remanded in custody to reappear on March 30.
A second person has been arrested in relation to the incident.
