The Napa County Sheriff's office says the chase started after they attempted to make a traffic stop for a vehicle code violation, but the driver of that car didn't stop.
The car ultimately became disabled near the intersection of Souza Way and Gateway Drive.
Police say they then encountered a male suspect and an officer fired shots.
Ken Wilson lives nearby and tells us he heard the whole thing.
"It sounded like I heard two shots. And after I heard that, I put down the wood I had in my hand and I went back to the back," Wilson said.
The suspect was transported to a nearby hospital.
Armed police vehicles could then be seen searching the neighborhood for the second suspect, who authorities say they later found and took into custody.
Investigators say two firearms were also found at the scene.
Thursday's events have come as a shock to many in this neighborhood.
ABC7 News spoke to several people who live here and they say things are normally pretty quiet.
"Oh no, I didn't sign up for all of this," said Daniel Powell.
Powell says having police activity around here is rare.
"Usually, I see the police once a month. Maybe once every two or three months," Powell said.
And after a relatively tense night, many locals say they're just relieved it's over.
"I asked the officer after this situation is over, 'do we have any reason to be unsafe out here after this?' and he said no."