The shooting happened at 1:36 a.m. at 10ak in West Hollywood, where Brown was having an album release party, a source told ABC News. Three people -- 49-year-old Knight, a 32-year-old man and a 19-year-old woman -- were hospitalized, Los Angeles police said.
"It was scary," Thomas Clark, an eyewitness in the club, told ABC News.
It's unclear what instigated the shooting.
"I was to the left of Chris Brown's table," Clark said. "There was words exchanged, someone said something to someone else, there was pushing and drift. After that, it wasn't very long ... it wasn't going to be a fist fight, guns were in the house and you hear the shots clear as day."
Partygoers rushed out of the club when the shots were fired.
Before the shooting, Brown wrote on his Instagram account that he was at 1Oak for a pre-VMA party.
Brown was uninjured in the shooting. He was seen driving away in an Instagram video taken by a person inside the nightclub.
Knight, who founded Death Row Records, was also shot at a pre-VMAs party hosted by Kanye West in 2005. Some conspiracy theories have attempted to link him to the murders of Tupac Shakur and Christopher Wallace, the rapper best known as Notorious B.I.G. Knight's Death Row Records, based in Los Angeles, was feuding with New York-based Bad Boy Entertainment around the time of their murders, which remain unsolved.
A spokesperson for 1Oak said the club is cooperating with police.
Chris Brown's rep said the singer was not involved but he is cooperating with police.
"Chris hosted an event in Los Angeles last night to celebrate the upcoming release of his album X, during which an incident occurred. This incident did not involve Chris; he was merely the host of the event," the rep's statement said. "He has and will continue to cooperate with the investigation."
ABC News was unable to reach a representative for Knight.