The gunfire scattered thousands attending Saturday's 4/20 counterculture holiday, the first since Colorado legalized marijuana.
A man and a woman each suffered non-life threatening gunshot wounds, officials said. Local media reports said a third person was grazed.
Denver Police spokesman Sonny Jackson said investigators are looking for one or two suspects, asking festival attendees for possible photo or video of the shootings.
He said police had no motive for the gunfire.
Witnesses described a scene in which a jovial atmosphere quickly turned to one of panic at the downtown Civic Center Park just before 5 p.m. Several thought firecrackers were being set off, then a man fell bleeding, his dog also shot.
"I saw him fall, grabbing his leg," said Travis Craig, 28, who was at the celebration, saw the shooting and said he used a belt to apply a tourniquet to the man's leg.
"He was just screaming that he was in pain, and wanted to know where his girlfriend was. She was OK. And then the cops showed up real quick, like, less than a minute. They put him on ambulance and left."
The annual pot celebration this year was expected to draw as many as 80,000 people after recent laws in Colorado and Washington made marijuana legal for recreational use.
A sizable police force on motorcycles and horses had been watching the celebration since its start earlier Saturday. But authorities, who generally look the other way at public pot smoking here on April 20, didn't arrest people for smoking in public, which is still illegal.
Police said earlier in the week that they were focused on crowd security in light of attacks that killed three at the finish line of the Boston Marathon.
"We're aware of the events in Boston," said Denver police spokesman Aaron Kafer, who declined to give specifics about security measures being taken. "Our message to the public is that, if you see something, say something."
Stephanie Riedel, who traveled to the pot celebration from Pittsburgh, said she was dancing with a hula hoop when she heard pops. A man ran past her, then she said the crowd started screaming and running away. She was about 20 feet from the shooting and heard four or five shots.
"I couldn't make sense of what it was at first," she said. "We were all having a good time and I was in the mindframe of, we're here at a peace gathering. I thought it some guys playing."
Rapper Lil' Flip was performing when the shootings occurred.
Aerial footage showed the massive crowd frantically running from the park.
Ian Bay, who was skateboarding through Civic Center Park when shots erupted, said he was listening to music on his headphones when he looked to his right and saw a swarm of hundreds of people running at him.
"I sort of panicked. I thought I was going through an anxiety thing because so many people were coming after me," he said.
Before the shooting, reggae music filled the air, and so did the smell of marijuana, as celebrants gathered by mid-morning in the park just beside the state Capitol.
Group smoke-outs were planned Saturday from New York to San Francisco. The origins of the number "420" as a code for pot are murky, but the drug's users have for decades marked the date 4/20 as a day to use pot together.
Colorado and Washington are still waiting for a federal response to the votes and are working on setting up commercial pot sales, which are still limited to people with certain medical conditions. In the meantime, pot users are free to share and use the drug in small amounts.
A citizen advocacy group that opposes marijuana proliferation, Smart Colorado, warned in a statement that public 4/20 celebrations "send a clear message to the rest of the nation and the world about what Colorado looks like."
"Does the behavior of the participants in these events reflect well on our state?" asked the head of Smart Colorado, Henny Lasley.
A smaller Sunday event scheduled at the park was canceled.
Saturday's attack recalled a similar shooting that left a police officer dead at a crowded jazz concert in Denver's City Park last summer.
The 22-year-old suspect in that case pleaded guilty to second-degree murder and faces at least 16 years in prison when he is sentenced at a hearing scheduled for June 21.
His attorneys said he was being pursued by gang members when he drew his weapon and fired.