It happened on East 4th Street between Avenues B and C just after 9 a.m., apparently in the middle of the roadway.
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"We could've been right there," neighbor Helen Terry said. "A lot of people were out around walking."
Police say the 42-year-old man, identified as Anthony Ramon, was shot in his stomach and leg.
He was rushed to Bellevue Hospital where he later died.
It appears an argument between two men led to the shooting.
"They were pumping his chest there and stuff like that, and then the ambulance came and took them away," witness Steve Cruz said. "It's sad to see that."
Police say they are looking for a man with dreadlocks wearing all black who fled eastbound on East 4th Street on a bicycle.
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Ramon was previously arrested in January, just one door down from where he was fatally shot.
He was charged with hitting a 23-year-old woman in the face in her East Village home.
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