It happened Thursday just before 6:30 a.m. near the Ventu Park Shopping Center.
According to the Ventura County Sheriff's Office, Thousand Oaks officers responded to the scene after several 911 calls were made about a possible domestic dispute involving a vehicle fire and a man with a large knife.
Investigators said the man, who has not been identified, got into some sort of altercation at the Palm Garden Hotel.
When officers arrived, he made his way to the Ventu Park Shopping Center near Hillcrest Drive.
The suspect went inside a bakery.
"During the course of their attempt to try to contact him and detain him, a Taser deployment occurred, however it was ineffective," said Capt. Rob Yoos with the sheriff's office. "The subject then ran into a local business that was occupied by customers and employees and was advancing on and threatening employees with the machete, then a deputy-involved shooting occurred."
The suspect was taken to the hospital in critical condition.
No other injuries were reported. The incident remains under investigation.