The shooting happened just before midnight Saturday in the pier promenade area of downtown Pismo Beach.
Officers found a 40-year-old man from Fresno with multiple gunshot wounds in the parking lot.
Investigators say the victim was questioned by a group of men and women about his gang affiliation before a fight started.
The suspect fired shots and was last seen in a tan or brown-colored older model Chevy Silverado last seen southbound on Highway 1.
He's described as approximately 18 to 20 years old with a thin build last seen in a dark-colored sweatshirt and dark-colored pants.
This is the first shooting-related homicide in Pismo Beach since March 2006.