The chase began after the driver allegedly failed to stop for a traffic and highway patrol officer on Alfords Point Rd, Menai, about 6am on Friday.
Further up the road, the driver's ute hit another vehicle and then came to a halt, police said.
The man, who has not been formally identified, died at the scene.
The driver of the other vehicle was not injured.
Alfords Point Rd has been closed in both directions as specialist police head to the crime scene.
Police from the Sydney City command will lead an internal investigation into the incident, which will be subject to an independent review.
It comes amid heightened attention on critical incident investigations by police after the death of a 95-year-old woman shot with a taser in an aged care home.
That officer was quickly suspended but the Greens criticised the role of police in leading the core investigation.
The police watchdog in May said the majority of critical incident investigations were conducted in a thorough and objective manner but some took years to resolve, delaying changes.
The watchdog also described its power to monitor officers' interviews as "illusory" given its presence had been rejected on every occasion by the involved police officer.
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