Rival drugs gangs had been causing tensions in Benidorm before one Briton was reportedly shot in the leg, according to a Wiganer.
Police have sealed off part of Calle Mallorca, the main road through the Costa Blanca resort after gunshots were heard at around 11pm.
Three arrests are said to have been made and two people, including one Briton, are believed to have been injured.
Kieron Pemberton, 34, from Standish, who was on a break with five friends, said: "There was a lot of tension on the main strip.
"It appeared to be between Russian and Polish gangs and it definitely seemed to be over drugs.
"One day while I was out there I took a wrong turning and two lads tried to jump me. But I managed to get away."
Kieron and his party were able to celebrate England's win over Colombia in the resort but the subsequent violence has not surprised him.
Several other tourists from the Wigan area are believed to be still staying around Calle Mallorca.
One witness, Michelle Todd, who was sat in a nearby bar, Secret Garden, said at the time:"Two people have been shot and it's all shut off. It's scary. We're not moving anywhere yet."
She said when she heard the shots she immediately knew the incident was serious.
A spokesman for Alicante Transfers, a travel firm, said: "It seemed there was someone shot in the leg and three others involved.
"People went running from the clubs and the main strip.The Strip and clubs have now been closed and sealed off.
"At this time the police have one black BMW and one person in custody.
"Seems to be a drug war."