The violence erupted on Black Friday, the traditional post-Thanksgiving start of the holiday shopping surge, but authorities indicated it was not prompted by a shopping frenzy.
The Palm Desert Police Department received calls of shots fired just after 11:30 a.m. and found the two men dead.
Riverside County sheriff's Sgt. Dennis Gutierrez confirmed there was a fight but said it was not over a toy.
He released little information at a news conference five hours after the shooting but emphasized there were no outstanding suspects and that no one was arrested. Detectives were reviewing security video and interviewing witnesses, he said.
The incident occurred near the front of the store in the check-out area. Gutierrez said Palm Desert Councilman Jim Ferguson said police told him two men with handguns shot and killed each other. Ferguson said he asked police whether the incident was a dispute over a toy or whether it was gang-related. He said police told him they were not going to release further details until the victims' relatives were notified.
"I think the obvious question everyone has is who takes loaded weapons into a Toys "R" Us?" he said. "I doubt it was the casual holiday shopper."
Gutierrez would not respond when asked if the violence was gang-related.
City spokeswoman Sheila Gilligan said police told her the shooting broke out between "two groups of individuals that have a dispute with each other."
Ray Turner, 20, said he was two aisles away when two women began shouting and screaming at each other and he had a clear view of the fight until a crowd clustered around them. Both women had children, he said.
"We thought it was just a fight and then someone yelled, 'He's got a gun. He's got a gun.' You really couldn't see nothing because there was a crowd," said Turner.
Rafael Gomez, 11, said he and his father had been in the store about 20 minutes before the shooting but were in a nearby Pizza Hut when they saw people pouring out of the store screaming. "We just saw them running and crying. I was kind of scared," Gomez said. "We got lucky."
Toys "R" Us issued a statement expressing outrage over the violence.
"We are working closely with local law enforcement officials to determine the specific details of what occurred," the statement said. "Our understanding is that this act seems to have been the result of a personal dispute between the individuals involved. Therefore, it would be inaccurate to associate the events of today with Black Friday."
Sarah Pacia of Cathedral City told The Desert Sun newspaper she was in the store with her two boys, ages 4 and 6, looking at coloring books when she heard a commotion in the next aisle. She thought it was people rushing to get a sale item. Then she heard three or four shots.
She said she froze, and store employees calmly escorted her out of the store.
"This is Toys "R" Us. There are kids shopping in there," Pacia said. Her son Jayden, 4, was clinging to her leg. He told her he didn't want to die, she said.
Palm Desert is a resort town about 120 miles east of Los Angeles.
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