It happened around 9:35 p.m. along the 5400 block of Delancey Street.
Police said a 27-year-old man was killed in the shootout. The second victim, a 50-year-old man, was also shot.
Police say the shooting may have been sparked after an altercation involving kids on the block.
On Tuesday afternoon, neighbors were cleaning up the aftermath of the incident. The squeals of children giggling on the normally busy street were replaced by the scraping sounds of a broom and an eerie, hushed silence.
"You see how solemn it is," said neighbor Brian Patterson. "Everyone is surprised. Everyone is feeling it."
Police said around 9:30 p.m. Monday night the two boys, 9 and 11 years old, were horse playing when things got rough and one of them got a black eye.
"The younger one calls his father or someone calls the father. He shows up and has some type of dispute with the other kid's father and then gunfire erupts. Basically this over two little kids," said Philadelphia Police Commissioner Richard Ross.
Witnesses said kids and parents watched on in horror as the events unfolded.
Police said the 27-year-old father was shot in the chest and torso. He was rushed to Penn Presbyterian in extremely critical condition and later died.
According to investigators the 50 year old was shot in the chest and leg. He is still critical after undergoing surgery overnight.
Police are still trying to confirm whether the men were shooting at each other or if there was a third shooter involved.
The victims have not been identified and no arrests have been made.
Anyone with any information is asked to call police at 215-686-TIPS.