It came less than 24 hours after another mass shooting in the US, when a lone gunman in El Paso, Texas, shot dead 20 people on Saturday.
Dayton police department said 10 people, including the gunman, had been killed, with another 16 people in local hospitals. The FBI is assisting with the investigation.
The city’s mayor, Nan Whaley, said the shooter was wearing body armour and used a “.223 high-capacity” gun during the assault.
“In less than one minute, Dayton first responders neutralized the shooter,” Ms Whaley said in a press conference.
On its Twitter account, the department said the active shooter situation began in the Oregon District at around 1am, but that officers “in the immediate vicinity” were able to “put an end to it quickly”.
Police believe there was only one shooter, and have not yet identified the suspect or a motive. Lieutenant colonel Matt Carper said the suspect used a long gun and fired multiple rounds.
Video from the scene near downtown Dayton showed a host of emergency vehicles on a street that had been cordoned off.
The Oregon District is a historic neighbourhood near downtown Dayton that’s home to entertainment options, including bars, restaurants and theatres. The shooting took place outside, on the 400 block of East 5th Street.
“This is extremely unusual, obviously, for any community, let alone Dayton,” Mr Carper said at a press conference. “In our Oregon District, this is unheard of.”
Miami Valley Hospital spokeswoman Terrea Little said 16 victims have been received at the hospital but could not confirm their conditions.
Kettering Health Network spokeswoman Elizabeth Long said multiple victims from a shooting had been brought to system hospitals but did not have details on how many.
“I’m heartbroken,” Ms Whaley tweeted early on Sunday, before thanking first responders for their efforts.
Nikita Papillon, 23, was across the street at Newcom’s Tavern when the shooting started. She said she saw a girl she had talked to earlier lying outside Ned Peppers Bar.
“She had told me she liked my outfit and thought I was cute, and I told her I liked her outfit and I thought she was cute,” Ms Papillon said. She herself had been to Ned Peppers the night before, describing it as the kind of place “where you don’t have to worry about someone shooting up the place.”
“People my age, we don’t think something like this is going to happen,” she said. “And when it happens, words can’t describe it.”
Tianycia Leonard, 28, was in the back, smoking, at Newcom’s. She heard “loud thumps” that she initially thought was people pounding on a bin.
“It was so noisy, but then you could tell it was gunshots and there was a lot of rounds,” Ms Leonard said.
Governor Mike DeWine issued his own statement before 7am, announcing that he had ordered flags in Ohio remain at half-mast and offered assistance to Ms Whaley.
“Fran and I are absolutely heartbroken over the horrible attack that occurred this morning in Dayton, the statement said. “We join those across Ohio and this country in offering our prayers to victims and their families.”
Additional reporting by agencies