An Invercargill suburb is recovering after one woman was killed and another person injured in a shooting.

The incident happened just after eight last night, on Otepuni Avenue in Newfield.

One person is in police custody, and it's understood a firearm was found at the scene.

Another person is in hospital - the extent of their injuries is not yet known.

Residents were warned to stay inside, while one witness said he saw a man on a push bike put on a balaclava and act suspiciously.

Invercargill Mayor Tim Shadbolt said people will be shocked.

"I'm greatly saddened by it, and I believe that Invercargill has one of the lowest crime rates in New Zealand."