Some people at the event in Toledo scrambled for cover while others rushed to help the victims.
Toledo deputy police chief Joe Heffernan said it appeared that at least two people fired weapons on Saturday near the Old West End Festival and were "probably shooting at each other".
Hundreds of people were at the festival, an annual two-day celebration in Toledo's historical district that includes live music, food vendors, home tours and shopping.
The remainder of the festival was cancelled on Sunday.
Organisers said "it would not be compassionate, responsible or possible to continue".
"We are heartbroken about those that were injured at the Old West End Festival," the festival said in a statement.
Two of the victims were in critical condition, Heffernan said.
The ages of the victims ranged from 14 to 61, with most of them in their early 20s.
"I am deeply concerned about the situation in Toledo tonight," Ohio governor Mike DeWine said in a statement.
"Summer festivals should be safe spaces for families to spend time together without fear of violence."
Officials urged people who were at the festival to come forward with any photos or videos.
Multiple videos posted to social media showed people running amid the sound of gunshots and emergency officials tending to others who appeared wounded.
Fire chief Allison Armstrong said it was difficult to get to the hospital due to closed roads and traffic from people leaving the festival but emergency responders were able to transport all patients from the scene within an hour.
Kevin Berry was sitting in the neighbourhood arboretum listening to live music with friends when he heard a handful of gunshots ring out.
"Everybody hit the deck," he said.
When Berry looked back up, he saw a gun being tossed to the ground less than 15 metres away from him.
Officers who were already on site for the festival responded immediately.
Berry, who has medical training and served in the US navy, walked around looking for anyone who might need help and saw at least five people with gunshot wounds.
"The folks who were hit were spread out around the arboretum area," he said.
George Kral, the city's safety director, said the Old West End Festival is one of the most iconic festivals in Toledo.
"And it's a shame that something like this had to ruin it," Kral said.
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