Authorities responded to reports of the shooting on South Parade in Auburn about 1.15pm on Monday.
Paramedics were at the scene treating three people wounded by gunfire, police said.
A crime scene has been set up and roads closed.
The incident, the latest in spate of public shootings in Sydney, reportedly took place opposite Auburn railway station outside a kebab shop.
Video of the crime scene posted to social media showed a victim being loaded into an ambulance by paramedics.
"This is shockingly brazen, and NSW Police Force investigators are already hunting down those responsible," Premier Chris Minns said.
"People committing this kind of violence can expect to be arrested, charged, and to spend years inside small jail cells."
Police Minister Yasmin Catley said her thoughts were with the people injured in Monday's violence, which had "no place in our community".
"It's horrifying, it's unacceptable and it shakes the sense of safety we all deserve," she said.
The investigation will likely be overseen by mega police task force dubbed Falcon, set up in late May after nine shootings between warring criminal gangs since the start of summer.
Some 100 detectives join another 50 officers in the sprawling task force.
In the most devastating public shooting, innocent plumber John Versace was executed in his driveway in a case of mistaken identity.
Police are still searching for the men behind the 23-year-old's murder on May 19.