The fight had dispersed by the time police arrived shortly after 8.30 pm, leaving only two seriously injured men in its wake.
Both men were taken to hospital where one succumbed to his injuries. The other remains in intensive care following the beating, police spokesman Sven-Marco Claus told The Local on Thursday morning.
No arrests have been made.
The asylum home with more than 30 rooms in the Fallersleben neighbourhood has now been closed off as a crime scene as police continue their investigation.
The residents have been moved to an alternative accommodation.
Emergency calls, which came from within the community, also reported shots fired, though Wolfsburg police have yet to find evidence of guns having been used, Claus said.
"We're now investigating where these gun shot reports came from and if there was any merit," he said.
Buses cleared out the residence following the fight. Claus said those living there are from various communities in Africa, but police have determined the fight was not politically motivated.
Police from Wolfsburg, Gifhorn, Königslutter, Salzgitter, Helmstedt and Braunschweig, including dog patrols, were all at the scene.
After finding trails of blood that left the grounds, a police helicopter was used to search for more injured people, though none were found.
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