Police later confirmed that one man, 37 years old, had died.
The incident took place at about 3.20 am Sunday at a nightclub near Little Chapel Street and Malvern Road.
A 28-year-old is still is fighting for life at The Alfred hospital. According to the police, four people were transported to a hospital, two of whom in critical condition.
Police say two men, aged 29 and 50, were hospitalised with non-life threatening injuries in the shooting at Love Machine.
"Those gunshot wounds were from a fairly close proximity ... so, you know... horrific injuries".
One guard was shot in the face, the Age newspaper said. Central London Shooting: Ukrainian Embassy Sealed Off by Police After Attack on Envoy's auto.
"We have got a lot of people that are focused on this and we won't stop", he said.
"It would appear that shots have been discharged from a vehicle in this area into a crowd that was standing outside the nightclub", Victoria Police Inspector Andrew Stamper told reporters.
"This is just a horrendous act".
In a tragic incident, some unknown assailants opened fire outside Love Machine Nightclub in Melbourne in the wee hours of Sunday.
Stamper stressed that there was "nothing to indicate" that the shooting was part of a "broader agenda".
Chapel Street is home to a number of popular nightclubs and the shooting on Sunday occurred while many people were still out. I'll post updates in the comments section below...
Steve Yousif, who describes himself as a Love Machine host, posted on Facebook that "the love machine family lost a lovely soul today".
"What happened last night was uncalled for and devastating. For some of you it was a night out, the rest of the Love Machine family lost a attractive soul today", he wrote.
Detectives and forensic police scoured the area for clues and are yet to rule out links to organised crime.
Three officers had searched the drains outside the entrance to the club, pulling up the grate to photograph the area below.
No arrests have been made so far.
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