A gunman remains on the run after a man was shot dead overnight during a brawl in the NSW city of Newcastle, north of Sydney.

Events began about 11.40pm at the Bar Beach carpark, near the popular Merriweather Beach, where a group of people were fighting.

Police say a white SUV pulled up and an armed man jumped out and fired at the 18-year-old victim.

Paramedics treated him, but he died at the scene.

A major crime scene has been set up and specialist police from Sydney, including the homicide squad, sent there.

The victim has yet to be formally identified.