The San Luis Obispo County Sheriff’s Office (SLO) said the shooting happened just after midnight and no arrests have been made.
The public is asked to stay clear of the area for the time being, KSBY reported.
Ambulances were called and five people have been transported to the hospital, according to a tweet from CAL Fire SLO.
Sheriff spokesman Grace Norris didn't have an update on the conditions of the five people shot, but she added there were no fatalities so far.
Norris said there was a gathering in the south end of the dunes on Saturday night around the same time of the shooting and police were called just after midnight.
It's not clear yet if there was more than one shooter, but Norris doesn't believe the public is at risk.
Detectives stayed on the scene on Sunday conducting interviews and processing evidence.
CAL Fire SLO tweeted an update at 9:51 a.m. EST that the SLO Sheriff's office will be taking over the investigation.
Around the same time, SLO County Sheriff's Office sent out a Tweet saying further information will be released as the investigation continues.
The Dunes have remained closed since the incident, but the area is expected to re-open soon, reported KSBY.