The car involved in a fatal shooting at Heckenberg in Sydney's west. Photo: Jason Webster

A manhunt is underway for a gunman that inadvertently shot dead the driver of a car while shooting at two pedestrians during an altercation in Sydney's west.

The dead man's car went on to hit one of the two pedestrians, leaving him with minor injuries.

A NSW Police spokesman said shortly after 6.30pm on Friday an altercation occurred between a driver and two male pedestrians in Matthew Street, Heckenberg.

Police at the scene of a shooting in Heckenberg on Friday. Photo: Jason Webster

The driver of the car confronted the two pedestrians, firing a handgun at them.

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The shot missed the two men but instead struck and killed a 46-year-old man driving along Matthew Street at the time. His car then went on to hit one of the male pedestrians.

A 20-year-old pedestrian was treated by Ambulance Paramedics for a minor injury and conveyed to hospital where he is understood to be in a stable condition.

A woman grieves at the scene of a shooting in Heckenberg on Friday. Photo: Jason Webster

The other pedestrian, a man aged 25, is being spoken to by police at Green Valley police station.

Police established a crime scene in Matthew Street which is being examined by forensic and ballistic specialists.

Officers also searched a home in nearby Eucumbene Street. There was no one home at the time the warrant was executed, and the gunman remains on the loose.

Emergency services at the scene of a shooting in Heckenberg that left the driver of a car dead. Photo: Jason Webster

Fairfax Media with AAP