A man has been arrested following the incident in Whitby, after which two men were taken to hospital and another was less seriously hurt.
North Yorkshire Police said a man in his 20s from Rotherham was arrested and bailed following the evening disturbance in Baxtergate.
A police spokesman said: "The incident was reported as homophobic hate crime and is being dealt with by police accordingly. Detectives believe it was an isolated incident.
"Police believe two groups of men were in JK’s bar before the incident took place. An altercation happened in the Baxtergate area at around 6.20pm, which spilled onto neighbouring streets."
The two injured men were treated in hospital for cuts and head injuries and have since returned home.
Detective Sergeant Andy Hall, of Scarborough Serious Crime Team, said: “This was a serious incident that left two men in hospital.
“We’ve launched an extensive investigation to establish what happened and we’d like to hear from people who saw or heard anything that could help our enquires.
“Maybe you were in the bar at the time and overheard a conversation between the two groups, or maybe you were driving on a nearby street and have dashcam footage of the altercation.
“Whatever information you have, we’d like you to get in touch. Seemingly small details can sometimes be a big help to investigators.”