The incident happened at The Vault XXI Boutique Lounge in the 300 block of South Alameda Street shortly after 1:30 a.m.
Police said the masked gunman fired into the crowd on the patio then took off. Two men were hit. Both were rushed to the hospital, where they were listed in critical condition after surgery.
The suspect reportedly ran to Alameda Street then headed north toward Third Street. Witnesses described him as wearing a beige hat, similar to a miniature fedora, a dark flannel shirt and jeans.
Officers said there may have been a dispute inside or outside the lounge. LAPD Lt. Paul Vernon said it appears the victims were targeted by the suspect.
Detectives processed the scene and found more than a half dozen shell casings from a semi-automatic weapon.
If you have any information regarding this incident, you're urged to call police at (877) LAPD-24-7 or (877) 527-3247.