Fourteen other people were injured in the incident, which comes after unrest in the city following the suffocation death of Daniel Prude while he was arrested by police.
As many as 100 people were at the gathering when the shooting started just before 12.30am local time (5.30am BST), acting police chief Mark Simmons told reporters.
Officers are still trying to piece together who opened fire and why.
Mr Simmons said it was too early to say whether more than one person had opened fire, or who the intended targets may have been.
A man and woman, estimated to be in their late teens or early 20s, were killed.
None of those who were wounded are believed to have life-threatening injuries. They are being treated at two area hospitals.
Mr Simmons said at a news conference near the home: “This is truly a tragedy of epic proportions.
“I mean, 16 victims is unheard of, and for our community, who’s right now going through so much, to have to be dealt with this tragedy, needlessly, for people who decide to act in a violent manner is unfortunate and shameful, and we’re going to do everything that we can as a department to bring those people involved to justice.”
The shooting comes as the city’s police department has been rocked by days of protests over Mr Prude’s death, caused when officers put a hood over his head to stop him from spitting, then pushed his face into the pavement until they noticed he had stopped breathing.
On Monday, the city’s mayor sacked police chief La’Ron Singletary, who she said initially misled her about the circumstances of the death.
Other senior police officials announced they would retire or leave top command positions.
Mr Simmons expressed frustration early on Saturday that someone had held a large, late-night party amid that tumult, apparently in defiance of a state ban on large gatherings because of the coronavirus pandemic.
“This is yet another tragedy where individuals are having these illegal, unsanctioned house parties taking place in these properties, which – number one – is not safe because of Covid-19, because of the conditions. And then you add in alcohol and violence and it just becomes a recipe for disaster,” Mr Simmons said.
Officers responded to calls of shots fired and found “approximately 100 people” running from the scene, Mr Simmons said.
Before the call, police were not aware of the party and had received no complaints about noise, he said.
The acting police chief said no suspects were in custody, but there was no reason to believe the neighbourhood was unsafe.
The names of the two people killed were not immediately released.
Rochester mayor Lovely Warren issued a statement asking for “prayers and support for all involved”.
She said: “I’m begging everyone to remain calm and exercise deep restraint as RPD investigates what happened here and seeks those responsible.”
