Los Angeles Times reported that the shooting took place after 10 pm (0600 GMT) around the location of a Chinese Lunar New Year celebration held in Monterey Park.
Monterey Park is a city in Los Angeles county, around 7 miles (11 km) from downtown Los Angeles.
Tens of thousands of people had attended the two-day festival, the report said. There is no clarity on how many people were shot, but reports said some fatalities have happened.
The Los Angeles Times reported that internal police communications said there had been some fatalities in the shooting.
It is not known if any suspects are in custody.
Footage posted on social media showed deserted, cordoned-off streets guarded by police cars.
Seung Won Choi, who owns the Clam House seafood barbecue restaurant across the street from where the shooting happened, told the Times that three people rushed into his business and told him to lock the door.
The people also told Mr Choi that there was a shooter with a machine gun who had multiple rounds of ammunition on him so he could reload.
Tens of thousands of people had attended the festival earlier in the day.
Monterey Park is a city in Los Angeles county, around 11km from downtown Los Angeles.
MNA/PR