The shooting of Gideon Basch, 31, by four officers drew hundreds of orthodox Jews on to the streets. In the melee, protesters chanted "Danger! Police crime!" and "Jewish blood is not cheap". Eggs and other objects were thrown at police called in to control the crowd, but there were no injuries.
The death happened in the Borough Park area of Brooklyn, home to a concentration of Hasidic Jews. Responding to a complaint, police challenged Mr Basch, who was hammering at an apartment door. After failing to subdue him with mace spray, four officers fired up to 16 bullets into him. Mr Basch, who had been wearing a prayer shawl and leather pouches for carrying scriptures, died in hospital.
The protest threatened to spawn a new crisis for Mayor Rudolph Giuliani, who is widely expected to stand againstHillary Rodham Clinton for a US Senate seat in New York next year. He has been credited with driving down crime rates in New York, but recently he has also suffered a backlash of complaints about the use of excessive force by members of the New York Police Department.
Monday's shooting brought echoes of the killing by four officers of a West African immigrant, Amadou Diallo, in the Bronx in February.
Revelations that Mr Diallo had been unarmed and engaged in no discernable crime provoked huge protests in the city for several weeks in the spring. Mayor Giuliani enraged minority communities by vigorously defending the police force.
Yesterday, the mayor was once again on the defensive. At a press conference he said he regretted the shooting, but added: "There appears to be every reason to believe that police officers acted in accordance with police procedures."
Police officials said that Mr Barsch, who had a recent history of mental imbalance, was repeatedly warned by the officers to drop the hammer. Instead, he allegedly swung the implement at the officers, one of whom stumbled and fell. It was then that the officers fired, striking him at least seven times in the torso.
The Hasidic community in New York has traditionally supported Mayor Giuliani. However, disgust at the shooting was widespread yesterday. "It's disappointing, and many feel that six officers would have been able to subdue a person swinging a hammer without shooting him. That's the anger," said a community activist, Isaac Abraham.
Mayor Giuliani, meanwhile, risks further unrest after refusing to grant a permit for a so-called "Million Youth March" scheduled to take place this weekend in Harlem. Last night, a federal judge overturned the city's ban on the march, which is being orchestrated by the militant African-American leader, Khalid Muhammad.