Julian Ingram, 37, is wanted over the shooting spree in the isolated town of Lake Cargelligo in western NSW, which police allege was related to domestic violence.
Sophie Quinn, 25, and her friend John Harris, 32, were killed when bullets were fired into their vehicle about 4.20pm on Thursday on Bokhara St.
Shortly after, Ms Quinn's aunt, Nerida Quinn, 50, was shot dead at a home on Walker St, a two-minute drive away.
Ingram, also known as Julian Pierpoint, had a long criminal history and was bailed after being charged with domestic violence offences in November, NSW Police Assistant Commissioner Andrew Holland said.
Police freed Ingram on strict conditions after an assessment deemed him low risk because he had not committed any violent crimes in the past five years, Mr Holland said.
A magistrate confirmed bail when Ingram appeared in Lake Cargelligo Local Court on December 3 and an interim apprehended domestic violence order was made on Ms Quinn's behalf.
That order, made in Ingram's presence, prohibited him from assaulting, stalking, threatening, harassing or approaching her or her home and workplace.
Mr Holland said police checked on Ingram "multiple times" before the shooting and confirmed he was complying with his bail conditions.
"In the time that he has been on bail, he has complied with every condition," he told reporters.
Police would investigate how Ingram, who never held a gun licence, was able to access a weapon.
A 19-year-old man was also shot at the Walker St home and is in a serious but stable condition in hospital.
Ingram was last seen driving a council ute away from Lake Cargelligo, with police subsequently searching nearby villages he was known to frequent.
More than 100 police, including tactical response officers, as well as army personnel, have been deployed to find him, urging the town's 1100 residents to be cautious and report anything suspicious.
Ingram's job as a gardener with the local council meant he knew the region well.
"It would be feasible he could maintain an extended period in the local area without being detected," Mr Holland said.
"Please do not approach him. He is considered armed and dangerous."
Tegan Quinn described her sister Sophie as her best friend in an Instagram post mourning the loss of her sibling, aunty and unborn baby nephew.
The streets of Lake Cargelligo were deserted on Friday as locals stayed inside - many with their curtains drawn - and shops closed their doors.
The dark hatchback in which Ms Quinn and Mr Harris were shot remained on the kerb on Friday morning, its windows shattered and a large cluster of bullet holes on the driver's side.
A young man and woman arrived at the street, blocked off by police, about 10am, and quietly wept.
The car, fitted with P-plates, was towed away in the early afternoon.
Letitia Bardawil said she heard up to four gunshots on Thursday afternoon, thinking they were fireworks at first.
When she came out of her house, she saw people trying to revive Ms Quinn and Mr Harris before family members arrived.
"It was honestly one of the worst things I've ever seen, seeing the family's heartbreak," Ms Bardawil told reporters, standing on Bokhara St.
All the victims were integral community members, she said.
Mr Holland said it would take a long time for the community to get back on its feet.
 "A death in a small community hits a town hard. Three deaths is very hard," he said.
The area commander was wary of detailing other areas police were searching for Ingram, who was last seen in the council-marked Ford Ranger ute with NSW registration DM-07-GZ and high-visibility markings.
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