Six businesses were destroyed by fire and police cars damaged before calm was restored in the neighborhood. The unrest began several hours after a man fleeing police after a traffic stop was shot and killed.
The National Guard has been called in to assist police in the US state of Wisconsin after a fatal shooting by police on Saturday sparked a night of angry protests and arson.
Sylville K. Smith, 23, was shot while trying to flee from an officer who had stopped his car on Saturday.
An uneasy calm had returned to the affected neighbourhood on Sunday afternoon. Mayor Tom Barrett said that the city still faced "a very volatile situation."
"One hundred twenty-five members of the national guard are on their way to Milwaukee as we speak," he confirmed in a news briefing Sunday afternoon. But he said the uniformed troops, who were activated by the state's governor, would not be deployed unless the city's police chief, Edward Flynn, decided they were needed.
Angry crowds took to the streets overnight by throwing rocks and torching buildings in protest over the shooting. Gunshots were fired, six businesses were destroyed by fire and police cars damaged before calm was restored in the neighborhood, which has a reputation for poverty and crime.
Seventeen people were arrested in the disturbances, Flynn said. Four police officers were treated for injuries and released from hospitals.
The violence in the Midwestern city comes after several police officers have been targeted and shot dead across the nation in recent weeks, including five in Dallas, following an outcry over the deaths of unarmed African Americans at the hands of police.
However Barrett reiterated Sunday that the individual shot by police, a 23-year-old local man named Sylville Smith, had been holding a gun in his hand "without question."
The shooting occurred after two police officers stopped a car Saturday and two suspects inside, including Smith, had fled on foot, police said.
"During the foot pursuit, one officer shot one suspect, armed with a semiautomatic handgun" and the suspect then died at the scene, the Milwaukee Police Department said in a statement.
Flynn said Smith had ignored an order to drop his weapon and that the entire incident lasted no more than 25 seconds.
Police said earlier that the handgun he was carrying had been stolen during a burglary in March.
The officer who fired on Smith was black, Flynn said, adding that the policeman now feared for his safety and was staying with relatives out of town.
The officer, whom he would not name, has been placed on administrative leave, as is standard in such situations.