Investigators said the 48-year-old man was killed in the crash, which happened about 3am on Friday in the inner-Sydney suburb of Waterloo.
Paramedics tried to revive him but he died at the scene.
NSW Police Assistant Commissioner Peter McKenna said the man, who was Indigenous, had a "significant" amount of methamphetamine and $10,000 cash in his possession.
The large amounts of cash and drugs would normally indicate they were being used as part of a supply operation, he said.
Police had notified the man's next-of-kin, who were interstate, as well as community elders and the Aboriginal Legal Service as part of the force's protocol, Mr McKenna added.
He batted away any suggestion officers unfairly targeted Aboriginal people and that it might have played a role in the death.
"There's nothing whatsoever to indicate to me that there's any type of profiling or that we do that," Mr McKenna said.
"Around the state, I've worked in lots of Aboriginal communities and I can tell you the police who are on the ground work really hard to build those relationships and have very good relationships."
A 2023 report by the Redfern Legal Centre found that Indigenous people represented about 45 per cent of all incidents of police using force in NSW over a four-year period.
Indigenous residents of NSW make up around 3.5 per cent of the total population.
Officers from outside the command area will launch a critical incident investigation into the crash and the police actions.
That investigation will be overseen by the police watchdog.
In a separate fatal crash overnight, a man is dead and a one-year-old boy has critical injuries after they were hit by a car during a walk.
The pair were in Mount Druitt in western Sydney about 7.45pm on Thursday when they were struck on a busy arterial road.
Emergency services arrived to find the child's caregiver - a man aged 57 - severely injured and they were unable to save his life.
Shortly after, a man believed to be the toddler's father presented the boy to hospital.
The child was rushed to Westmead Children's Hospital in a critical condition.
The driver involved in the crash, a woman aged 37, was taken to hospital for mandatory testing and was assisting with inquiries.
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