Police in a marked car saw a grey sedan pulled over on the side of the Great Western Highway at St Marys, in Sydney's west, about 4am on Tuesday.
When they approached the car it sped away before crashing into a Corolla further down the road.
The Corolla driver, Lual Lueth, 49, died at the scene.
The other driver, Edgar Stephen Haufano, 43, allegedly ran from the scene before being arrested a short time later.
He was assessed in hospital and released on Wednesday, before being charged on Thursday with dangerous driving occasioning death, driving recklessly and driving while disqualified.
An internal investigation has also been launched into the officers' actions in the lead-up to the fatal crash.
Meanwhile, Mr Lueth's family and friends are mourning the Sudan-born father and community leader.
"His death has saddened us, to lose such a great person at this earliest time," Deng Majak Piok posted to Facebook, noting he was chair of a Duk community group in Sydney.
"(He) was a great friend with whom we shared the histories of our journeys."
Duk is a region in South Sudan, which was gripped by a long-running civil war in the previous decade.
Another friend said Mr Lueth changed many lives in the local Sudanese community.
"His passing is a painful blow to our community and there are no words to adequately express the shock and grief felt by all who knew him," said Gabriel Thon Deng, the president of the Nyarweng Community Australia.
"Lual was a true hero."
Haufano was refused bail on Thursday at Mount Druitt Local Court and will reappear on January 10.
A fundraiser for Mr Lueth's family has raised more than $20,000.
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