“After responding to shots, the policemen managed to restrain the assailant.”
Local media reported that police raided the man’s house after monitoring him for several weeks over extremist online activity.
The suspect was said to be in his twenties and had recently converted to Islam.
Fearing he would act, a counter-terror squad entered his home at around 6am local time on Thursday (3am BST) but were faced with the suspect wielding a shotgun, local news website L’Inforeported.
In the ensuing gun battle, one police officer was shot in the arm and another in the hand, while the assailant was “neutralised”.
Terrorism in 2016: Terror attacks in Europe claimed by Isis
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All three men have been taken to hospital in Réunion, which sits east of Madagascar in the Indian Ocean, making it the farthest-flung EU region and department.
The shooting came just a week after a man murdered a police officer on Paris’ famous Champs-Elysees.
Isis claimed responsibility for the attack, which followed Islamist massacres killing almost 240 people since the start of 2015.
Several plots have been foiled by the security services, including a planned bombing to coincide with the ongoing presidential election.
Far-right candidate Marine Le Pen has attempted to capitalise on fears of terror and immigration, while centrist frontrunner Emmanuel Macron has also put forward policies to improve security.
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