A neighbor discovered the woman's body in the middle of the alley at around 3:30 a.m. Investigators said it appears the body had been there for some time.
The victim has not yet been identified, but police believe she is a Hispanic woman between 20 and 25 years old.
"It's a bad way to wake up. I didn't even know what happened, I didn't hear any gunshots or anything," said Charles Braden, a Hyde Park resident.
The area has seen its share of problems in the past. The alley is well known to residents for drug deals, but murder is not common.
"This is my first time ever seeing something like this and I've been in this neighborhood a long time," said a resident who identified herself as Kim.
Lt. Glenn Krejci said police have little to lead their investigation. Anyone with information was urged to call the LAPD 77th division at (213) 485-4164.