Anthony Dwain Lee was shot several times by Officer Tarriel Hooper, who had been called, along with a second officer, to the Beverly Hills mansion after neighbours complained of noise.
Lee, 39, appeared in the 1997 movie Liar Liar, starring Jim Carrey and on several television programmes, including NYPD Blue and ER.
The shooting took place in the early hours of Saturday morning at a crowded party of costumed guests, many of them actors and other entertainment industry professionals, according to the Los Angeles Times newspaper.
The Los Angeles police department said that when Lee saw the officers he pulled what looked like a handgun and pointed it at Officer Hooper.
The officer, fearing for his life, fired several shots from his service pistol, wounding Lee, who died later of his injuries.
Officer Charlotte Broughton, a spokeswoman for the LAPD, said many of the party-goers were in costume.
'Exclusive party'
One guest told the Times that some of the guests were dressed as police officers.
It was not known if Lee was wearing a costume.
It was also not clear if Lee realised Hopper was a real officer with a real gun.
The police department said Lee's gun was "a replica semiautomatic pistol, dark in colour".
Party-goer, Robert Hull, told the Times: "It was a shock that an officer would shoot at such a party.
"This was an exclusive party with security. Some of these people are making six figures, and this officer saw a toy gun at a Hallowe'en costume party and opened fire."
"He was an incredibly gifted actor and person," said friend Mitch Hale.
"It's devastating... Why did they shoot someone at a Hallowe'en party?"
LAPD spokeswoman Charlotte Broughton said: "He [Hooper] had no way of knowing it was fake even though people were in costume.
"If you feel your life is threatened, you react in the way you were trained."
The police department and District Attorney's office are both investigating the shooting.
The shooting adds to the growing problems for the LAPD, which has been rocked with scandal in recent months with allegations of brutality and corruption.
Seventy officers are currently under investigation and 100 convictions have been overturned.
Other officers have been charged with filing false police reports, planting evidence and perjury.