On Friday morning, officers boarded the vessel 130km (80 miles) off the island of Wangdueng in the Yellow Sea.
The man appeared to have been shot in the chest and was pronounced dead when taken to hospital in South Korea.
Scores of Chinese vessels are seized in Korean waters for illegal fishing every year.
The South Korean government is said to have expressed regret about the latest incident and explained the details to Chinese officials.
According to South Korea's Yonhap news agency, the consulate general of China in Gwanju told reporters on Friday: "I heard of the incident this morning. It is really regrettable, and I am really sad."
Yonhap identified the man as a 45-year-old skipper with the surname Song.
Coastguard officials told Yonhap that guns were used during the raid as Chinese fishermen on board fought with them.
An emergency doctor told the news agency that the cause of death was presumed to be "penetrating injuries sustained from a bullet".
In recent years, Chinese fishing boats have been going further and further away from the Chinese coast to waters where fish are abundant.
In 2013, South Korea's coast guard detained more than 180 Chinese vessels found fishing in the Yellow Sea. The fishermen are usually released after paying a fine.
Last year, a Chinese fisherman was sentenced to 30 years in jail for stabbing a South Korean coastguard to death after his boat was stopped for illegal fishing in the region.
A Chinese fisherman has been killed during a South Korean coastguard operation against illegal fishing, officials said.