Shots were fired around 5 a.m. near the intersection of Richmond Street West and University Avenue.
Toronto police Insp. Howie Page told CBC News that a number of officers were in the area dealing with crowd-control issues when the shots were fired.
"The officers quickly responded to the area," said Page.
"As they approached Richmond Street, they observed three individuals begin to run. There was a short foot pursuit and the officers were successful in apprehending all three individuals."
Page said the officers found a handgun on the ground near one of the three individuals who was arrested.
The firearm was seized and police found multiple bullet casings in the area.
Police spotted a man "who appeared to be suffering from an apparent gunshot wound to his lower right leg," Page said.
The victim was taken to a local hospital for treatment.
Page said a number of witnesses came forward to speak with police in the immediate aftermath of the shooting.
"This is not a good situation that someone’s been shot, but it’s certainly a good situation that witnesses have been able to come forward to us."
Page also said the arrests were due to the increased police presence that Chief Bill Blair announced would last for the rest of the summer, in the wake of a number of high-profile shootings in the city.
“At five in the morning down here, we would not normally have had that many officers," he said.