Dyfed-Powys Police has referred itself to the police watchdog after officers shot a man brandishing a crossbow in Llanelli.
The man, who has not been named, was taken to hospital with a wrist injury after being shot with a baton round, and is now in custody.
Dyfed-Powys Police received reports of a man making threats to kill in Burry Street, Llanelli, shortly after 2am on Tuesday morning.
Firearms officers were called to the scene and detained a suspect after discharging plastic bullets.
He was taken to Llanelli's Prince Philip Hospital as a precaution before being discharged and taken into custody.
A large area of the town remained cordoned off on Tuesday afternoon, with forensic teams in attendance.
Dyfed-Powys Police have now referred the incident to the Independent Office for Police Conduct (IOPC).
A spokeswoman said: "We were called to Burry Street, shortly after 2am today in response to a man making threatening comments.
"Firearms officers attended the scene and engaged with the man, who they subsequently arrested on suspicion of making threats to kill and conveyed to hospital as a precaution. He currently remains in police custody.
"The matter has been referred to the IOPC who will conduct an independent investigation into the circumstances of this incident.
"A crossbow was recovered from the scene but we would like to reassure the public that this is an isolated incident and we are not looking for anyone else.
"The matter has been referred to the IOPC, who will conduct an independent investigation into the circumstances of the incident."
An IOPC spokewoman said: "We have begun an investigation into Dyfed-Powys Police actions during an incident where they discharged baton rounds outside a property in Burry Street, Llanelli, early this morning.
"A man was not seriously injured but was taken to Prince Philip Hospital with a wrist injury. He was arrested at the scene.
"Our investigators are currently at the scene and ... gathering evidence."