Merced police say the shooting happened at Parsons St. and E. 27th Ave. at about 2:30 am.
The 21-year-old man hit by the gunfire was rushed to a local trauma center, but he died of his injuries there.
Merced police investigators say a home nearby was hosting a party, and they are trying to find out if there was a connection.
They are at the scene right now.
They say roads in the area have been closed and are urging drivers to find alternate routes.