An unidentified man died of gunshot wounds on the way to hospital during the clashes and two people were injured, police chief lieutenant colonel Rudy Sufahriadi said.
Violence began on Sunday in central Poso, a town at the center of hostilities between Christians and Muslims in 2001 and 2002 that left more than 1,000 dead.
Police fired warning shots after being attacked by people throwing stones, Sufahriadi said.
“We are still investigating the shooting and the situation in Poso is now under control,” he said.
Clashes erupted after police set up a checkpoint following a small explosion.
A man refused to be searched, fled on a motorcycle and then signalled to friends to come out and fight, Sufahriadi said.
Hundreds of men then went on a rampage, torching police vehicles and the homes of two police officers, he said.
However one eyewitness, who was hospitalised with three gunshot wounds in the chest, said police were firing wildly when he arrived.
“I saw many security forces shooting in all directions” he said.
“The police [withdrew] … but they came out again to face the mob and began shooting.”
After a period of relative quiet, violence has been on the rise in Poso following the execution on September 22 of three Christians convicted of leading a militia that killed at least 70 people at a Muslim boarding school in 2000.
A prominent Christian minister, reverend Irianto Kongkoli, was killed earlier this month and there have been at least six bomb blasts in recent weeks.
The state intelligence agency has warned there may be more bloodshed in coming days during celebrations of Eid al-Fitr marking the end of Ramadan, the Muslim fasting month.