Canadian police say the suspect had already detonated one bomb and was threatening to set off a second bomb. A key question still to be answered is how the FBI knew an attack was coming across the border, in Canada.
Canadian police shot and killed a man Thursday who they said was about to carry out a terror attack using a bomb.
After being tipped off by the FBI, in Washington, that an attack in Canada was imminent, the Royal Canadian Mounted Police (RCMP) traced the threat back to a man who was already on their watch list.
Police raided the home of Aaron Driver in Strathroy, Ontario - 105 miles (170 km) east of Detroit, Michigan, in the US. The RCMP said they fatally shot Driver because he had already detonated one bomb and was about to detonate another.
A taxi driver was injured in the explosion. "He's shaken up a bit, but he's OK," an unnamed representative of the taxi company said.
"Earlier today, the RCMP received credible information of a potential terrorist threat," the RCMP said in a statement. "A suspect was identified and the proper course of action has been taken to ensure that there is no danger to the public's safety."
It remains unclear what kind of attack Driver, 24, was allegedly planning. He was a Muslim convert who was described by his former attorney as a "passive individual."
Court order limited movements
Driver was never charged with a crime, but in February he was placed on a so-called "peace bond," which is a court order that restricted his movements, required him to stay away from social media and computers and to avoid contact with IS and other militant groups.
It is unclear how he managed to allegedly plan a terror attack given that he was already on law enforcement's radar.
In March 2015, Canadian officials said they foiled a plot by a self-proclaimed IS supporter to bomb the US consulate and other buildings in Toronto's financial district.
The country saw a large increase in terrorism offences last year - 173 versus 76 in 2014, according police information reported by Statistics Canada in July.
There were 62 instances of people being accused of participating in what the agency described as "activity of terrorist group" in Canada, up from 26 the previous year, and 28 alleged cases of people trying to leave the country to do so, up from seven in 2014.
Driver's house was situated on a tranquil street in the heart of Ontario's farmland.
bik/rc (Reuters, AP)