The attacker, who remains on the run, approached the group of five people at around 1 am near a hospital in the southern Neukölln area of the city and shot three of them from close range. The other two escaped unharmed.
The 22-year-old died in hospital shortly after the attack - it is thought from a head wound. The other two underwent emergency operations but by Thursday afternoon were in a stable condition, police said in a statement.
Police said the injured men were of Russian and Arabic origin and aged 16 and 17 respectively. The victim who died was of Turkish heritage.
A witness living on Rudowerstrasse where the shooting took place, told the Tagesspiegel daily newspaper that she was woken up by noise outside, and looked out of the window and she saw three people lying on the ground.
“I didn't think much of it at first, because that kind of thing is normal here,” she told the Berlin paper. It was when members of the group started screaming that she realised something serious had happened.
The weapon is still missing and the attacker's motive remains a mystery.
“We can't say anything at all about the background to the attack yet,” a police statement said.
“An investigation is being conducted with great urgency."
Media reports suggest that in the light of a string of racially-based murders by neo-Nazis having been uncovered last year, police are not ruling any options out in the investigation.
The gunman is thought to be around 1.80 metres tall and was wearing a dark hooded top at the time of the attack.