The officers appeared to take cover before returning fire early Monday.
"This video does not provide all the answers, but we are releasing it to provide transparency," interim Louisville Metro Police Chief Robert Schroeder told reporters Tuesday.
"It does not answer every question. Why did (McAtee) fire? And where were police at the time he fired? We know these are questions the community is asking, and we are asking these same questions ourselves."
McAtee's mother, Odessa Riley, on Monday questioned the actions of the police, saying her son was "trying to make an honest dollar to take care of his rent and his bills. And they gonna shoot him down like a dog."
Police said the officers who fired the shots had not been interviewed.
"He was well-known in the community and loved by many, including many of our police officers that frequented his restaurant," Mayor Greg Fisher said Tuesday before the video was released. "It was known as a place of refuge, a last stop on the night home. His barbecue -- of course, he would say it was the best in the world. And many people agreed with that as well."
Fisher said Wednesday that the city will hire an outside company to conduct a full, independent review of the practices and use of force training of the Louisville Metro Police Department.
The Louisville police chief was fired after the shooting
Police Chief Steve Conrad was fired after officials discovered two of his officers involved in McAtee's shooting had not activated their body cameras.
"This type of institutional failure will not be tolerated," Fischer said Monday.
McAtee was shot as police and National Guard members tried to disperse a large crowd, according to police, who said officers returned fire after being fired upon. The city has a dusk-to-dawn curfew after nights of protests.
The LMPD officers who fired their weapons, identified as Katie Crews and Austin Allen, are on administrative leave pending an investigation into the shooting.
The National Guard members have not been identified and have not been been disciplined or reprimanded, said Steve Martin, a spokesman for the state's National Guard.
Kentucky, like other states, has had protests stemming from the the death of 46-year-old George Floyd at the hands of Minneapolis police last week.
Louisville protesters have also voiced anger over the March death of Breonna Taylor, an emergency medical technician who was shot multiple times when three LMPD officers entered her apartment by force to serve a search warrant.
Police and National Guard units around 12:15 a.m. early Monday were sent to clear a large crowd in the parking lot where McAtee sold his BBQ at a store front.
Police had moved in to disperse the crowd
Louisville Metro Police Maj. Paul Humphrey said police were trying to disperse the crowd after dealing with other "unruly crowds" around the city Sunday night. The gunfire erupted after police used the pepper balls to disperse some people in the crowd, he said.
People usually gathered in the parking lot of Dino's Food Mart, next to the BBQ spot, on weekends to eat and listen to music.
In dispatch audio released by police an officer is heard saying, "took fire from the small building just to the east of Dino's, across from 26th Street. Small gray building. We have people barricaded inside that building."
Kentucky Gov. Andy Beshear said state police were investigating McAtee's death.
"It is our belief at this time that approximately 18 shots were fired between the Kentucky National Guard and the Louisville Metro Police that evening," Michael Brown, secretary for the governor's executive cabinet, told reporters on Tuesday.
"Those weapons are also in our custody for further testing, and they will be tested for DNA and any other things we can get from them," he added.
Russell Coleman, US attorney for the Western District of Kentucky, also said on Twitter his office has started an investigation, which will be carried out alongside FBI Louisville office and state police.
"Our commitment is the truth, no matter what that truth is -- good, bad, ugly," Beshear said.