A gunman opened fire inside a crowded southern California bar and dance hall, killing 12 people, including a police officer, officials said on Thursday.

The mass shooting took place late Wednesday at the Borderline Bar & Grill in the town of Thousand Oaks, said Ventura County Sheriff Geoff Dean.

The suspected gunman was found dead inside the building.

He had not yet been identified, but authorities believe he acted alone. It was too early to speculate on the shooter's motive but terrorism had not been ruled out, Dean told reporters.

Ron Helus, a deputy sheriff, was struck "multiple times" by gunfire upon entering the bar's front door and later died, Dean said. Helus had served on the force for 29 years.

"He died a hero," Dean said. "He went in to save lives, to save other people."

At least a dozen people were also injured.

Matt, a witness who declined to give his last name, told KABC-TV he heard shots and saw a tall, heavier figure "wearing all black, with his hood on." He said the shooter was armed with a smaller calibre handgun with a light or laser attached to the bottom.

"All I did was grab as many people as I could and pull them underneath the table," Matt said.

Matt said 10 to 15 shots were fired in the first round before he and several others escaped out of a window that he broke with a bar stool.

Witness John Hedge said he saw a suspect throwing smoke bombs into the front of the bar and saw a security guard get shot.

"I was at the front door and I was talking to my stepdad," Hedge told KABC-TV. "I just started hearing these big pops. Pop, pop, pop. There was probably three or four, I hit the ground."

"The gunman was throwing smoke grenades all over the place," Hedge continued. "I saw him point to the back of the cash register ... and he just kept firing. I ran out the front door."

Hedge said the gunman had a beard, wore a hat, had a black jacket and may have had glasses.

Dean said sheriffs arrived on the scene within minutes of receiving calls about the incident.

Borderline Bar & Grill hosts weekly dance classes and concerts and describes itself as Ventura County's largest country music dance hall and live music venue. A "College Country" event was being held at the bar at the time of the shooting, according to the bar's website.

Thousand Oaks is located about 60 kilometres north-west of Los Angeles.