Police went to the area of Canal Street and 23rd after someone reported seeing a man with a gun.
The first officer to arrive found both victims' bodies near the Merced City School District building.
Detectives have not made any arrests in the case yet, and they say it's not clear yet if the shooting was gang-related.
"It's too early to tell at this time. We're trying to determine the motivation of the killing, so we'll have to continue the investigation," Lt. Tom Trinidad of the Merced Police Dept. said.
"It's scary, I feel for the families of the victims because here it is the holiday time, they've got to bury a loved one. And I'm sure someone loved them," Merced resident Myrtle Rochel said.
Investigators are asking anyone with information to call the Merced Police Department.