A police spokesman said yesterday: "Police attended at Kaingaroa and secured the scene and rescued one of the injured persons.
"The other injured person was taken out of Kaingaroa by family members and was located by an ambulance already on the way to Kaingaroa."
One ambulance was sent from Rotorua and another from Murupara and both victims were taken to Rotorua Hospital.
A third person received knife wounds to his forearms and was also being treated at Rotorua Hospital.
Police found two suspects in Taupo and they were later helping officers with their inquiries.
Esther Pubban and Sibi Raika, who live in Daniel St, had just got out of bed when they heard two gunshots go off down the street.
"We ran over to the window and saw two guys in a car," Ms Pubban said. "One was hanging out the window holding a rifle. He shot it two more times at someone in front of them. We couldn't see them, though. They were further down the street."
Mr Raika said four children were home at the time of the incident but didn't realise what was going on. The incident had not put them off living in the small forestry town.
"My sister's up from Levin," Mr Raika said. "It's funny because last night I was joking with her when she was going to bed, 'You might hear a few gunshots go off but just ignore them'. And then this happens."
Police said it was too early to say if the incident was gang-related but photos on Mr Iraia's page on the social networking site Bebo show him wearing a yellow bandanna over his face - the colour of the Tribesmen gang.
There is also a photo of a Tribesmen T-shirt on the page and he makes several references to the gang.
Another photo shows him and several yellow-bandanna-clad friends at the Tribesmen's annual poker run event.
About 20 carloads of people waited outside the police cordon to get into the town. One man was coming home from work as a truck driver. He and his wife - who was at home but was unaware of the incident - had lived in Kaingaroa for about 12 months and had been thinking about moving back to Opotiki. This incident had made up his mind.
"I think we'll be moving back home. We gave ourselves a month to decide. This is it, we'll go back."
A woman sitting in her car outside the cordon said there was trouble in Kaingaroa every day.
"It used to be such a nice place to live. Twenty years ago you could leave your house unlocked and go up the road to the shop. Now you can't do that."
In May, two people were assaulted with an axe and received serious facial injuries. Others were threatened with a sawn-down firearm and some shots were fired.