Victoria Police confirmed he was shot in Coburg North at 4.40pm on Monday.
In a statement, police said the 64-year-old Broadmeadows man was wanted for questioning in relation to the death of a man in Albanvale on Saturday.
It's believed the man saw police and took off in his vehicle with police in pursuit.
Shortly after, officers chased the man on foot before he confronted them armed with a screwdriver, and was shot.
Ambulance Victoria officers treated the man in a car park near the Edgars Creek Parkland before taking him to hospital where he remains in a stable condition
Callers to radio station 3AW spoke of hearing rapid gunfire and then police cars swarming the area.
"Around at 4.44pm I was making my pasta sauce and heard two loud bangs in rapid succession," a 3AW caller identifying himself as Travis said.
"There was an interval of about 20 seconds and then another three loud bangs.
"Now there are cops everywhere."
Police were quick to distance Monday's shooting from another in which former bikie gang member Suleiman "Sam" Abdulrahim was gunned down in Fawkner on Saturday.
"While we are still establishing the exact circumstances of the incident we can confirm there is absolutely nothing to link it to the incident in Fawkner on Saturday," a statement said.
A crime scene has been set up in the area with nearby roads shut down.
Professional Standards will investigate the incident as is standard procedure.