"There seemed to be an exchange of gunfire between individuals targeting each other," Toronto Police Service Deputy Chief Frank Barredo told a news conference, as quoted by the US news channel.

Barredo said four people were hospitalised with serious injuries.

It remains unclear whether any of the people involved in the exchange of gunfire were among those killed.

Police received reports of the shooting at around 8:12 p.m., Barredo said. An estimated 13,000 people were attending the festival at the time.

Toronto Mayor Olivia Chow said she was "disgusted and angered" by the shooting.

"I am disgusted and angered by the shooting at Salsa on St. Clair tonight," she wrote on X.

"My thoughts are with the families, friends and communities of those who were injured or tragically passed away," she said.

"This was a reckless, despicable act of violence at a crowded festival. I will ensure Toronto Police have every resource they need to find those responsible, and they will keep working around the clock to get guns off our streets," the mayor added.

Salsa on St. Clair is a major two-day festival celebrating Latino culture through music, dance, food and art.

PM Mark Carney wrote on X: "I am horrified by the shooting that has killed two people at the Salsa on St. Clair Festival in Toronto."

He further said: "My prayers are with the families grieving their loved ones, those who are in critical condition, and everyone who has been affected by this horrific event."