Police were called to Spital Hill at 3pm after reports of a fight between the two groups of men.
A man has been taken to hospital with gunshot wounds.
A Section 60 order has been put in place by police overnight, meaning extra stops and searches will be carried out on people in the area.
The South Yorkshire Police statement in full:
Emergency services were called at around 3pm today (Wednesday 21 June) to reports of an altercation in the Spital Hill area of Sheffield.
The altercation is believed to have involved two separate groups, at this time thought to be individuals of Kurdish and Somalian origin.
Police also received reports of a firearm being shot in the area. One man has been taken to hospital with suspected gunshot injuries, which are not life-threatening.
There is a significant police presence in the area while initial enquiries are underway and there will be an increased armed and unarmed presence in the community in the coming days to provide reassurance.
A Section 60 order has also been put in place for the Spital Hill area overnight, giving officers additional powers to stop and search individuals. This means that anyone in the specified area may be searched for weapons.
Officers are keen to hear from anyone who may have witnessed the incident this afternoon. Anyone with information is asked to call 101 quoting incident number 666 of 21 June 2017.
You can also give information to Crimestoppers anonymously and in confidence on 0800 555 111 if you are not comfortable speaking directly to police.