Villagers had blocked the road for the third successive day in protest against the arrest of 45 people from the area for the July 13 violence in which two people were killed.
When the police tried to clear the road blockade at Khajipalli in Kodala area, about 40 km from here, crude bombs and stones were hurled at them, police said.
The police then opened fire in which five persons were injured, Deputy Inspector General of Police (Southern Range), R K Sharma said.
A man succumbed to his injuries while being taken to MKCG Medical College Hospital here. The condition of another injured was critical, he said. Eight police personnel were also injured in the attack by the villagers, he said.
"The situation in the area was tense but under control," the DIG said.
Chief Minister Naveen Patnaik announced a compensation of rupees two lakh to the next of kin of the person who died and directed DGP Man Mohan Praharaj to visit the area, official sources said.
Traffic was disrupted between Aska and Bhubaneswar for several hours because of the road blockade. Additional Director General of Police Sanjeeb Marik was earlier in the area to study the situation. Police personnel were deployed in strength in the area.