One of the suspects was shot "in an interaction with police" after officers arrived at the scene but is expected to survive, they said.
The province's police watchdog is investigating that shooting. The Special Investigations Unit said the interaction occurred while police were investigating a vehicle several kilometres from where the shooting took place, and involved a male occupant.
The Special Investigations Unit is automatically brought in to review police handling of incidents that result in death or serious injury _ the SIU says the man was being treated in hospital for what it describes as a non-life threatening injury.
Paramedics said two of the five victims suffered "very serious" wounds. Police said one person's wounds are life threatening, the other four were described as not life threatening.
Toronto television station CP24 reported that four of the people shot were males, the fifth was a woman.
Toronto police say they were called to the area (near Jane Street and Driftwood Avenue) just before 6 p.m.
Sgt. Steve Hicks said there were many children in the area at the time. The incident took place near a high school and a community centre.
Hicks said he was running a youth program at the centre when he heard a commotion and rushed to the scene, where he found the five people who were shot.
He said police know the five victims, whose names have not been released.
Brianna Mombourquette said the shooting happened right by the home where she lives with her family.
The teen said her sister ran downstairs and told the family she'd heard two gunshots and "someone saying 'get down, get down.'"
Mombourquette, 15, said she went outside with her parents later but didn't see anything, though her father saw someone get loaded on an ambulance and another person on the ground.
"I was scared and still am," she said.