The Iranian national died from head injuries as he was being transferred to Lorengau Hospital on Tuesday night after protesting detainees at the Papua New Guinean centre broke through the perimeter fence.
Reports of gunshots during riots have been confirmed and one man is being treated for a gunshot to his buttocks in Port Moresby while another asylum seeker sustained critical injuries involving a probable base of skull fracture and was medically evacuated to Australia.
Simmering tensions remain at the centre and 100 additional security staff are on standby following the violent clash between asylum seekers and PNG police and security staff.
Australian Immigration Minister Scott Morrison confirmed a government investigation into the incident would be carried out and warned journalists against the "rumours and wild stories that are circulating".
He confirmed transferees pushed down internal fences between compounds, before the incident escalated quickly with several hundred transferees being confronted by G4S staff kitted with their personal protective equipment and shields.
At around midnight, at the height of the disturbance, Morrison said G4S staff withdrew to the internal perimeter and the PNG police "intervened" with transferees who had breached the external perimeter.
"My department secretary, Mr Bowles, will initiate a full review into this incident," Morrison told journalists at a press conference.
"If people are going to seek to disrupt the centres and knock fences over and engage in disorderly and indeed violent behaviour then they will put themselves at risk - if they go beyond that perimeter fence and I don't think that is behaviour that should be encouraged," he said.
"I notice that there continues to be all sorts of rumours and wild stories that are circulating, that is why I have taken the step today to brief twice on this matter.
"I will continue to brief but understand that one of the ways that these events are utilised by those seeking to disrupt is to push all sorts of strange stories around to create further confusion and to further undermine the efforts of the government to ensure there is order in these places."
PNG chief migration officer Mataio Rabura is heading an investigation team, which is due to meet local leaders including Manus Governor Charlie Benjamin, at the centre.
Prime Minister Peter O'Neill confirmed a team of police and government officials were in Manus to investigate the incident.
"The deceased is an Iranian national who died at the hospital from serious injuries sustained during the fight at the centre," he said in a statement.
"Police, Defence and Immigration Department officials are now in Manus and a thorough investigation is underway.
"The situation at the centre now appears under control.
"The preliminary investigations suggest that less than 50% of the 1400 transferees at the centre were involved in the disturbances.
"I want to state clearly here that any instances of criminality and breach of PNG law will be dealt with by the proper lawful authorities.
"The government will not tolerate anyone breaking the laws of Papua New Guinea."
O'Neill and Australian Prime Minister Tony Abbott have discussed the incident and "agree with the measures taken to address this situation".
"I have assured Abbott that PNG remains committed to the resettlement program and finding a lasting solution to the global challenge of human smuggling and illegal trafficking of persons in the
region," O'Neill added.
Australian Human Rights Commission president Professor Gillian Triggs reiterated her calls for all asylum seekers on Nauru and Manus Island to be returned to Australia.
"As the commission has continued to point out, Australia cannot avoid its international human rights obligations by transferring asylum seekers to third countries and may remain liable for the consequences of doing so," Triggs said.
"Australia should ensure that adequate safeguards are in place in those countries at all times, including the application of the rule of law."
Meanwhile, the Refugee Council of Australia said the Manus Island incident was a tragedy waiting to happen.
CEO Paul Power called for an immediate investigation and full disclosure of what happened on Manus Island.
"The government has admitted there was a risk of such a serious incident occurring," he added.
"For many years, the Australian government has understood the consequences of indefinite long-term detention on the mental health of asylum seekers.
"Until asylum seekers are given pathways to finalise their refugee status, we will see more serious incidents on Manus Island, Nauru and in facilities like Christmas Island where people are being detained for long periods of time.
"RCOA again calls for the Australian government to abandon offshore processing and reintroduce alternatives to detention that provide prompt processing of refugee claims while asylum seekers are supported in the community in Australia."
A total of 1340 asylum seekers remain at the Manus Island detention centre.