The shootout happened in a wooded area right behind a community center.
A woman whose grandson was at the scene told ABC11 there was a party for a 16 year old when a fight broke out between rival gangs.
Around that same time, police were out in the area on another call.
"It didn't look like ordinary you know. I know something bad had happened," said Sanford resident Ira Gainey.
Authorities say two officers were shot at around 11:30 p.m. Saturday behind the M.T. Burch Center.
Police say several subjects on foot approached the officers. Shots were fired and one officer was struck by a bullet in his upper thigh. The other officer wasn't hurt.
Gainey lives right across the street in the center and was arriving home when it was turned into a crime scene.
"They wouldn't let you come close. They had it blocked off from all the roads around here," she said.
One suspect was arrested. Darrell Naquan Hill, 19, has been charged with two counts of attempted murder.
Hill is being held at the Lee County Jail under a $500,000 bond.
Warrants have also been filed on a second suspect, who is at a hospital right now being treated for non-life threatening injuries.
The injured officer was treated at Central Carolina Hospital and released. Police have not identified him.
The State Bureau of Investigation has been called in to review the shooting. In following standard procedure, the officers involved are now on administrative leave.