Sgt. Damon Gutzwiller, 38, was fatally shot during the confrontation in Ben Lomond, an unincorporated area, Santa Cruz County Sheriff Jim Hart said.
A second deputy was injured, and a third officer from the California Highway Patrol was shot in a hand, the sheriff said.
Gutzwiller was a married father of one child with a second child on the way, Hart told FOX 2 of the San Francisco Bay Area.
“Words cannot express the pain we feel for Damon and his family," Hart told the station. "Today, we lost a hero."
The suspect, identified as Steven Carrillo, 38, was shot during his capture and was being treated at a hospital for non-life-threatening injuries, the sheriff added.
The deputies responded to a 911 call around 1:30 p.m. after a caller said a suspicious van had guns and bomb-making devices inside, Hart said.
When deputies arrived, they saw the van drive off so the deputies followed. As the van went down a driveway at Carrillo's home the deputies were ambushed by gunfire and explosives after getting out of their vehicle.
Gutzwiller was hit by gunfire and later died at a hospital. Another deputy was wounded by gunfire or shrapnel and struck by a vehicle as the suspect fled.
Carrillo tried to carjack a vehicle and was wounded while being arrested.
Hart said Carrillo was taken to a hospital for treatment and would be charged with first-degree murder.
Ben Lomond is a town of about 6,000 residents in the Santa Cruz mountains.
The Associated Press contributed to this story.