Abdul Numan Haider was monitored by authorities for three months before allegedly attempting an audacious beheading outside a Melbourne police station on Tuesday.
According to The Age crime reporter John Silvester, Haider "planned to behead" the officers and drape their bodies in an Islamic State of Iraq and Syria (ISIS) flag.
Fairfax Media reported that Haider had been planning to post the images to social media websites to be included in ISIS's latest web propaganda.
Victoria's police commissioner, Ken Lay, said monitoring of the teen began three months ago. Police concerns were raised when he appeared at a Melbourne shopping mall last week with an ISIS flag.
"There's certainly information that he was present at the shopping centre in the last week or so with the flag that appeared to be an ISIS flag," Lay said.
"It's true to say late last week we learned of some behaviours that were causing us significant concern and our interest was greatly heightened."
Haider was then approached by police officers who agreed to meet outside the Endeavour Hills police station on Tuesday night.
The teen's passport had been cancelled by authorities over fears he'd leave Australia, before he allegedly launched the failed beheading plot and was killed.
Police confirmed Haider's links to the controversial Al-Furqan Islamic centre in Melbourne.
Muslim leaders including Australia's Grand Mufti and the Lebanese Muslim Association (LMA) condemned the actions of the teen in a press conference on Wednesday.
LMA spokesman Samier Dandan said recent events had seen four Sydney mosques receive threats, and labelling young men carrying out violence in the name of ISIS as "lunatics".
Ustadh Mohammed Junaid Thorne, an Australian Muslim with links to militant groups in the Middle East, released a statement on his Facebook page querying the police's actions:
"Attempting to comprehend the logic / rationale behind: 1. "Police said the two officers met the Narre Warren man outside the police station before he lashed out at the officers with a sharp instrument. He then ran towards the police station and was shot." 2. " Counter-terrorism police did not consider the youth a major threat, which is why he was invited for a low-key meeting outside a police station. But the youth was known to intelligence investigators due to his recent erratic behaviour." --- Is it standard practice to invite suspected terrorists outside a police station for a "low-key meeting"? and why did the suspect run back towards the police station? subsequently being shot."
The shooting comes days after Australia's largest terror raids, in which one man was charged with allegedly planning a beheading plot.
Lay joined with the Victorian premier, Dennis Napthine, in calling for Victorians to continue with "life as normal", especially in the lead-up to Saturday's AFL Grand Final.