Gary police received a call about a shooting in the 1100-block of North Warren Street, in Gary's Miller Beach section, just before 7:20 p.m.
When they arrived, they found a 69-year-old man lying in the front yard, who had been shot.
As police continued to investigate, they found blood that tracked into the home. There, they found a 73-year-old woman, who had also been shot.
Gary fire crews took the woman to St. Catherine Hospital and the man to Methodist Northlake Hospital for treatment.
The woman died at the hospital.
The Lake County, Indiana Coroner's Office identified her as Margaret Mary Sangerman, and said she was shot multiple times.
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The man was critically injured, but is stable.
Police said the suspect took the victims' vehicle after the deadly shooting.
The vehicle is described as a blue Nissan Xterra, with Indiana plates that read "Blue Mom."
The car was later located in a Chicago suburb, with the help of license plate readers.
The male suspect is described as wearing a brown trench coat and ski mask.
The neighborhood is on edge, as police hunt for the gunman.
"It's a shock for our neighborhood. This is a nice little community, a beach community. So what do you do? Hopefully the law catches them," neighbor William Doerscheln said.
Neighbors say the two shot were a married couple.
They said they heard a commotion before discovering the attack, which remains under investigation.
"Apparently, Mike was able to put his arm up, and wave a truck down. And they called police, and he was hollering that his wife was in bad, please help his wife," Celeste Murday said.
Sangerman's friends called her Peggy, and say she and her husband, Mike, were fixtures in the usually quiet beachfront neighborhood.
"He's a DJ, and he worked in safety at the mill. He's a good guy, very good. He had parties. He'd do his songs," Doerscheln said.
Investigators haven't given a motive for the attack.
Anyone with information is urged to contact Sgt. James Nielsen at 219-755-3855.