Deputies were at a scene in Gilroy involving a barricaded subject and a weapon, the Santa Clara County Sheriff's Office said.
The standoff unfolded at a home on Dryden Avenue near Bishop Court in unincorporated Santa Clara County near Gilroy.
That's where deputy sheriffs responded around 8 a.m. and were shot at by the suspect -- no one was hit at that time, according to authorities.
The Sheriff's Emergency Response Team and Crisis Negotiations Team said it was using all available de-escalation tactics for a peaceful resolution.
Gunfire erupted again Sunday afternoon.
Authorities say the man walked out of the house and was a threat. That's when an officer from an area agency opened fire.
The suspect was wounded and taken to a hospital. A sheriff's deputy was also hit by a bullet that ricocheted during the gunfire. That deputy is in a stable condition and is expected to recover.
"It's a very traumatic event -- a very large, critical incident. Heck, one of our deputies was struck by a ricochet. Regardless if it was a ricochet or a bullet, I mean, that's a big, big situation," said Sergeant Russell Davis with the Santa Clara County Sheriff's Office.
Davis says they're still investigating what caught on fire near the suspect's house.
ABC7 News cameras caught smoke in the air over the scene. Deputies say they'll be at the scene all night to conduct the investigation.