Witnesses said the argument was over the price of a cup of tea. A video shot by a person at the scene and sent to Reuters showed a man lying on the floor surrounded by angry onlookers. It was not immediately clear if he was dead.
One of the onlookers held up a bullet casing and accused the police of killing "poor" Egyptians. A crowd later smashed a police vehicle, photos on social media showed.
Security sources said one man was killed and another seriously wounded in the incident which took place in the eastern Cairo suburb of Rehab. The wounded man was taken to hospital.