Chris Ferrell, owner of Nashville's Pit and Barrel bar, told police he shot Mills in self-defense, following an argument over the singer smoking inside the bar.
“We’re investigating Chris Ferrell’s claims of self-defense,” said Kris Mumford, a police spokeswoman.
After the shooting, the 44-year-old singer was transported to Vanderbilt University Medical Center, where he later died.
Mills, who toured with his band The Wayne Mills Band in the college circuit, is survived by his wife and a young son. His manager has established a Wayne Mills Family Fund where fans can make donations for the two.
Both Ferrell and Mills have prior arrest records. Ferrell has been arrested twice for driving with a suspended license and Mills had a prior conviction for driving under the influence and reckless endangerment.
Ferrell is not in custody.