An unidentified man opened fire late on Sunday in the neighbourhood known as Greektown.
"Other than the shooter, we have a young lady that is deceased," Toronto police chief Mark Saunders told reporters.
"We are looking at all possible motives... and not closing any doors," he added.
Paramedics, firefighters and police soon converged on the scene of the shooting in Toronto's east end, which has many popular restaurants, cafes and shops.
Police said the gunman had used a handgun. Earlier reports said nine people had been shot.
Reports of gunfire began at 10pm (02:00 GMT Monday), CityNews.com said. Witnesses said they heard 25 gunshots, the news website reported.
Toronto is grappling with a sharp rise in gun violence this year.
Deaths from gun violence in the city jumped by 53 percent to 26 so far in 2018 from the same period last year, police data last week showed, with the number of shootings rising by 13 percent.
Toronto deployed about 200 police officers from July 20 in response to the recent spate of shootings, which city officials have blamed on gang violence.