The shooting, posted on YouTube, has sparked outrage in Canada's largest city, with some calling it unnecessary police force.
Video shows Sammy Yatim, 18, holding a knife inside the streetcar with police outside. Yatim goads police while officers yell: "Drop your knife!" Shortly after, shots are fired.
Ontario's Special Investigations Unit is examining the early Saturday morning shooting. The SIU says Yatim died from multiple gunshot wounds.
Toronto Police Chief Bill Blair said today he's conducting a parallel investigation.