Hoonah police officers Tony Wallace and Matt Tokuoka died after the shooting late Saturday, said Bob Prunella, acting city administrator.
"We believe they were ambushed by the individual," Alaska State Troopers spokeswoman Megan Peters said.
John Marvin Jr., 45, barricaded himself in his home and Alaska State Troopers and other law enforcement agencies were at the scene Sunday, maintaining their positions through the night.
Prunella said he didn't know what led to the shooting. Police officials said they were investigating motives but have not released any details.
Peters said that the standoff was continuing Monday, but declined to give further details, saying no further information will be released until the situation ends.
"We want a peaceful resolution," she said.
"We don't want to have another tragedy on our hands," she said. "We don't want to lose another officer."
Troopers were urging residents in the shoreline community of about 800 to stay away from the area. Hoonah is situated on an island about 40 miles (65 kilometers) west of Juneau, the capital.
Tokuoka left the home of his father-in-law, George Martin, just before the shooting. The 39-year-old officer was off-duty and had spent the evening there before leaving with his wife and two children, Martin said.
Soon after they left, Martin heard two shots. Wallace was knocked down, and Tokuoka told his wife and children to get away and then he was shot as well, Martin said.
"I imagine he was trying to administer help to this other officer when he got hit," Martin said.
Wallace was on duty at the time of the shooting. It was unclear why he was in the area.
Wallace, 32, died during surgery in Juneau and Tokuoka died early Sunday at a clinic in the Native village, according to Martin.
"The whole town's in shock," he said. "I've been getting calls all day. It's a bad situation."
Martin said his home is just a block and a half from Marvin's. He didn't know why the officers were ambushed but said police have had run-ins with Marvin in the past. He said Marvin lives alone.
Alaska State Troopers were leading a multi-agency response, and Peters said a warrant was issued for Marvin's arrest. The Coast Guard transported the Juneau Police Department's SWAT team to the village, Peters said.
Prunella said the deaths leave the Tlingit community with just two full-time officers - the police chief and a trainee. He said the southeast Alaska town of Wrangell sent some officers to help out as needed.