The Insurrection Act is a 19th Century law that allows active-duty military personnel to be deployed for law-enforcement duties inside the US.
Trump has previously said he might invoke the 1807 law elsewhere without ever doing so.
The president posted on Truth Social that he would use the law if Minnesota officials failed to stop the "professional agitators and insurrectionists".
DHS said Wednesday's shooting occurred after a car chase involving a Venezuelan national, Julio Cesar Sosa-Celis, who was previously convicted for driving without a licence.
The agency statement said after the pursuit, Sosa-Celis got out of his vehicle and fought with the federal agent.
Two more illegal immigrants from Venezuela, Alfredo Alejandro Ajorna and Gabriel Alejandro Hernandez-Ledezma, came out of a nearby apartment, according to the agency.
All three attacked the law enforcement officer with a snow shovel and broom handle, DHS said, before the agent opened fire, hitting Sosa-Celis in the leg.
The agent was taken to hospital. Sosa-Celis was also taken to hospital with non-life threatening injuries. All three Venezuelans were arrested.
"What we saw last night in Minneapolis was an attempted murder of federal law enforcement," said DHS Secretary Kristi Noem.
She said the officer was "ambushed and attacked" by the men and fired a defensive shot.
On Wednesday night, clashes broke out between protesters and law enforcement in the Hawthorne area of Minneapolis, near the scene of the shooting.
City police chief Brian O'Hara said his officers were hit by fireworks, ice and snowballs.
Local media, including the Minnesota Star Tribune, reported that a number of vehicles believed to belong to the federal government were damaged in the disorder.
Around 3,000 federal officers have been deployed to Minnesota in recent weeks.
Minneapolis Mayor Jacob Frey, who has demanded ICE leave the city, said on X on Wednesday: "No matter what led up to this incident, the situation we are seeing in our city is not sustainable."
Minnesota Governor Tim Walz, a Democrat, made a direct appeal to the president on Thursday posting on X: "Let's turn the temperature down."
Walz, who has previously called ICE a "modern-day Gestapo", told Minnesotans: "We cannot fan the flames of chaos."
The Democratic governor, who ran for US vice-president alongside Kamala Harris in the 2024 election, said earlier this month he would end his bid for re-election.
The move came in the wake of a fraud scandal involving the state's welfare programmes.
Trump has said Operation Metro Surge will continue in Minnesota after a federal judge on Wednesday denied Minnesota prosecutors a temporary restraining order against US Immigration and Customs Enforcement (ICE).