Michael Rodriguez, 18, and Mario Cazares, 17, are suspected in the fatal shooting of 21-year-old Julio Cuevas, who was gunned down in the 400 block of Madison Avenue just before 8 p.m. Sunday.
Cuevas was shot multiple times and was pronounced dead at the scene.
Investigators believe five to eight people participated in the murder and are continuing to search for more suspects.
Cazares was arrested at his Palo Alto home just before noon on Monday. He is being charged as an adult.
Rodriguez was arrested earlier that morning as he was leaving his home in Redwood City, according to police.
Anyone with information that might help the investigation is asked to contact the Redwood City Police Department at (650) 780-7100.