Ten people are in hospital after shots were fired in the Moss Side area of Manchester, Sky News reported.
"A large number" of
both armed and unarmed officers attended Claremont Road at about 2.30am after
reports of gunshots.
Police say some of those hurt have suffered major injuries in what they called "a dangerous attack".
A Caribbean Carnival earlier in the day had brought large groups of people to the area, with several after parties understood to have taken place in Claremont Road.
It is not known whether the carnival, which was due to take place across the entire weekend, will still take place today.
Footage reportedly showing the aftermath of the incident was posted on Twitter, with the caption: "Shooting at Manchester Moss Side post carnival street party".
Moss Side is a large and notorious housing estate in the city, with Claremont Road running for about two miles through it.
The estate has numerous gang territories, and both drug and gun use is known to be a problem in the area.
The dark video posted on UK Rap's feed appears to show a panicked group of people being helped by police.
As a voice cries out, shouts of "move" can be heard, while another voice asks "can you hear me".
"Give us some space guys" can also be heard in the background, while another voice says, "are you dumb?" as the camera pans around.
Detective Superintendent Debbie Dooley said: "We currently have a number of people in hospital all being treated for different injuries but thankfully most do not appear to be life-threatening at this time.
"Officers are trying to establish exactly where this incident took place and who is responsible for such a dangerous attack."
Reporting from the scene, Sky News correspondent Nick Martin described the debris in the street following the carnival, with multiple Nitrous Oxide (laughing gas) canisters littering the floor.
He said: "Police have described an epidemic of gas drug use that we see a lot on housing estates, and there are hundreds of these all over the floor. It will give you a sign that there was a carnival going on here yesterday, but there were other things going on as well."
Wayne Everett, a local DJ, described Moss Side as "a volatile area" said police should not have allowed the carnival to go ahead.
said: "It's only a matter of time. You can't have thousands of youths in
the area in the early hours of the morning just doing what they want. It's
Last year, ahead of the carnival, a man was murdered.
Officers and forensic experts are now on the scene establishing exactly where the shooting took place and identify those involved.
Superintendent Dooley said: "The area is being searched and examined while we are also trying to speak to as many people as possible and are reviewing CCTV to get all the facts."