The shootings happened about 6 p.m. at Al's Barber Shop, said police spokeswoman Kelly Miner.
In all, ten men were shot and three were confirmed dead, reports CBS Detroit station WWJ-TV.
Details were sketchy because police were still investigating what happened, and it wasn't yet clear how many people opened fire.
Police Chief James Craig told reporters at the scene that "suspects engaged a couple of victims" before "several shots were fired." He said it's not known if any of the victims fired back.
Miner said two cars pulled up outside the barbershop and people in the vehicles exchanged gunfire with each other.
"Somehow someone shot into the building, and that's when people rushed out of the building and were running into other area businesses for cover," she said.
Both of the dead men were inside the barbershop, she said.
Lorne Carter told the Detroit Free Press that he was smoking a cigarette against the wall of a nearby business when he heard what sounded like 30 to 40 shots.
"It sounded rapid," Carter said.
According to CBS Station WWJ Detroit, a witnesses said he was riding his bike down 7 Mile when he heard what sounded like ten to 15 seconds of automatic gunfire.
Police used yellow crime tape to cordon off several blocks around the shooting scene. A frantic Elaine Williams waited behind the tape to learn the fate of her 29-year-old son, who had gone to the barbershop for a haircut, The Detroit News reported.
"Help me find my son," she cried.
The barbershop is in a strip mall along a major road on the city's east side. Nearby businesses include a Chinese restaurant, auto repair shops and a convenience store.
Craig said Al's is a known illegal gambling spot.
"We're not sure if this was over a bad debt. We have no idea," the police chief said. "We know it's a barbershop and gambling has occurred in this location."
He told reporters that police were looking for two vehicles that the suspects might have been using: a 2004 white Chevrolet Impala that possibly has a broken window and bullet holes in the back, and a 2004 black Impala.
Miner said police would continue to question witnesses late Wednesday and would release no further information for the night.