Sources close to the investigation say a woman who was taken to hospital in life threatening condition after she was shot by police during an incident in the city's southeast on Wednesday morning has died.

EMS officials say crews were called to the 2000 block of 35 St. S.E. at about 6:45 a.m.

Police say an officer responded to a call about a suspicious person who was reportedly going in and out of backyards in the area.

The officer, a six-year member of the force, confronted the suspect, who was a woman in her 30s.

Police say the woman fired pepper spray at the officer at which point the confrontation escalated and the suspect was shot.

A woman was taken to Foothills Hospital in critical condition where she later died.

Sources tell CTV News that the officer sustained minor injuries in the incident.

Police blocked off an alley between 19 and 20th Avenues and blocked off the roadway between 31 and 35th Street S.E for several hours.

Cally Berry has lived in the area for about four years and says police knocked on the door at about 7 a.m.

"Big loud pounding on the door, people don't just pound on the door for no reason so we figured there was something going on," she said. "So we came out to the back and saw what must have been about a dozen cop vehicles and personnel wandering around. Can't really leave our garage right now considering it's taped off."

She says the area is prone to petty theft and that she has had property taken out of her yard before.

"Our main concern was just the fact that there's this daycare right here, the owner of which, we’ve talked to a handful of times, she's a really nice lady, tons of kids right there so," she said. "We have had things taken out of our backyard but we haven’t really seen it happen."

Another man who spoke to CTV News says he had just dropped off his child at a nearby care centre when the incident unfolded.

"They were struggling in the alleyway and then the offender, I guess, was trying to go for her gun and she was yelling, 'don't grab my gun', and then it ended up with the offender getting shot twice," said the man who wanted to remain anonymous.

The Alberta Serious Incident Response Team (ASIRT) is investigating the incident and has no further information at this time.