The victim has been named as Brenda Pollitt, 55, of Nicholas County.
Investigators are probing the circumstances surrounding the shooting by the officer, named as Scotty Hill.
It appears Hill intended buying the horse from a relative of Pollitt's.
Pollitt had demanded the horse be removed from her property by midnight and had threatened to kill it if her demand was not met.
The relative had contacted Hill, who went to uplift the animal.
A confrontation ensued and Pollitt is alleged to have produced a pistol.
Hill is reported to have unloaded the horse in a bid to defuse the situation but the matter escalated.
Pollitt died at the scene.