A young woman was found dead in a house after the incident this morning – which witnesses described as relating to "chemicals".
Firefighters donned specialist orange chemical protection suits with full face coverings to deal with the danger.
Homes in Magdalen Road were evacuated and neighbours asked if they had smelled a noxious gas.
A spokesperson for the police said they believed the incident was related to "chemicals".
A woman has died after a chemical incident in Oxford this morning
They said they were treating the death of the woman, aged in her 20s, as unexplained but not suspicious.
Early reports incorrectly stated an explosion had taken place.
Residents said police raced down the street banging on doors and ordering people to evacuate.
Others were told to stay inside their homes for their own safety.
TENSE photos as 'CHEMICAL INCIDENT' near Oxford University leaves one dead
Fri, January 20, 2017
A young woman was found dead in a house near Oxford University after the blast this morning, which witnesses described as a 'chemical incident'.
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Emergency services in attendance at Magdalen Road in Oxford where a women has been found dead inside a home after a 'fear for welfare' incident.
A nearby retailer said: "All we have been told is it's some sort of chemical incident.
"When I came to the shop there was a lot of sirens and more and more cars, police and fire engines were coming.
Emergency service personnel at the scene in Oxford
"It's a family business so my first thought was actually I hope the family is ok. We haven't been told how long it will last.
"At the moment they have cordoned off most of the road and the firemen are standing around in chemical suits."
Residents believe the chemical incident was chemical-related
Another nearby worker said: "It makes you wonder because nothing like that happens here.
"I have been here thirty years and never seen such a large police presence."
A spokesman for the University of Oxford was unable to rule out the deadly chemical involved in the incident came from the university's labs but warned "that is speculation".
Police are investigating after a woman was killed in a chemical incident today
A Thames Valley Police spokeswoman said: "Police are dealing with a fear for welfare incident in Magdalen Road. The road has been closed.
"Members of the emergency services are wearing chemical suits as a precautionary measure as it is believed the person may have access to chemicals."