A woman is in hospital after being shot in the arm during a targeted shooting at Gateshead overnight.

Police say two women and two men were leaving a unit on Paper Street about 8.45pm on Tuesday when they were approached by two people with their faces covered, one of whom was armed with a firearm.

According to investigators, two shots were fired towards the group. A 50-year-old woman was struck in the upper right arm, while the second bullet hit a window of the unit.

All six people involved left the scene before police were notified about 9.20pm.

Officers from Lake Macquarie Police District established a crime scene and began canvassing the area.

The injured woman was later located at a home in Charlestown and transported by NSW Ambulance to John Hunter Hospital, where she remains in a stable condition.

A 38-year-old woman is assisting police with inquiries at a local police station as detectives work to determine the circumstances surrounding the shooting.

Detectives are urging anyone who witnessed the incident or has CCTV, dashcam or other relevant footage from the area around the time of the shooting to contact Belmont Police or Crime Stoppers on 1800 333 000.