It has been "quite some time" since there was a shooting of any kind in Thousand Oaks, a city of about 130,000 people about 40 miles (64 kilometers) west of Los Angeles, just across the county line.
Authorities said the incident took place at the Borderline Bar & Grill - though the extent of the injuries is not yet known.
Another witness said he saw a security guard being shot as well as a female cashier, before he also fled.
Officers on the scene said at least 30 shots had been fired and that victims would be at multiple locations as they fled, local media reported. The suspect reportedly threw smoke bombs inside the bar.
'The gunman had glasses and a black jacket.
Ventura County Sheriff's Office Captain Garo Kuredjian said it is "still an active scene".
A police helicopter swirled overhead and officers surrounded the area with cars.
Witnesses told The LA Times someone ran into the bar about 11.30pm, United States time, and started firing what appeared to be a black pistol.
The gunman was still believed to be inside the bar an hour later, according to a police official.
SWAT teams have been pictured trying to surround the restaurant.
A college country night was being held at the venue, which is popular for line dancing.
There is more than 2,500 square feet of dance space.