It happened after 11:00 p.m. Friday near Merced Avenue and Shirley Street.
Officers say an altercation happened between at least two people at the party.
Then, shots were fired, hitting a 16-year-old and a 17-year-old boy.
Investigators say the 17-year-old died at the scene from his injuries.
The 16-year-old is expected to survive.
Merced Police are searching the area for video surveillance and witnesses.
If you have any information on this incident, you are asked to call the Merced Police Department.
Stay with ABC30 for the latest details on this developing story.