Two people have been shot and a third stabbed in an incident at Kaingaroa, 50km southeast of Rotorua.

A police spokesman said the armed offenders squad was deployed after shots were fired from a car at the occupants of another car about 9.30am. One person was shot in the hand and another in the arm.

"Police attended at Kaingaroa and secured the scene and rescued one of the injured persons," the spokesman said.

"The other injured person was taken out of Kaingaroa by family members and was located by an ambulance already on the way to Kaingaroa.'

Both victims were taken to Rotorua Hospital.

A third person suffered knife wounds to his forearms after he became involved in the dispute and was also being treated at Rotorua Hospital.

Police located two suspects at a Taupo address and those people were helping police with their inquiries.