Jamie Laramée, 37, and his 25-year-old brother, Cody died in the shooting at the Nite Lite bar on Newman Boulevard. Montreal police said the victims were known to police.
A third person suffered non-life-threatening injuries and was treated in hospital for injuries likely sustained in the struggle, not gunshot wounds, police said.
Police said an argument broke out in the bar at around 6 p.m. when one person pulled out a gun and opened fire.
Const. Raphael Bergeron said the suspect fled on foot.
"We were in a position to arrest a man during the course of the evening following the event due to information given to a Montreal police officer concerning a man covered in blood," he said.
"We arrested him. We brought him to the detention centre where he met with an investigator but, at this point, the man has been released."
Bergeron said the 20-year-old man is now considered a "victim witness."
Police are still looking for one or more suspects who were involved in the shooting and the fight. Investigators are still speaking with witnesses and have not released a description.
Const. Anie Lemieux, also of the Montreal police, said officers are working to ID the assailant or assailants.
"We don't know if we're talking about one or more. We don't have any description to give out yet," she said.
People living in the neighbourhood are concerned about the spread of violence in LaSalle in recent years.
Longtime resident Robert Simmons works near where the men were shot and killed.
"Today, it's really terrible, compared to what it was 40 years ago. It's not the same thing at all," he said.
The deaths are the 14th and 15th homicides on Montreal police territory in 2013.