Officers responded to a report of a possible stabbing about 2 a.m. near the intersection of Second Street and Monterey Road.
Arriving officers located a 27-year-old Morgan Hill man suffering from a stab wound on the left side of his neck. He was transported to San Jose Regional Medical Center with life-threatening injuries, according to police.
A 35-year-old man from San Jose was also found unconscious on Second Street suffering from blunt trauma to his face, police said. He was taken to Saint Louise Regional Hospital in Gilroy, where he was treated and released.
Detectives have determined that prior to the stabbing, both victims were involved in a verbal altercation involving a group of people near the intersection as the downtown bars were closing, police said.
As the altercation escalated, several members of the group began to fight and one of them stabbed the 27-year-old man, police said. The group then ran toward the rear parking lot of Just Breakfast at 17415 Monterey Road.
Police are investigating the motive behind the stabbing and have not determined if it was gang related.
Anyone with information about the stabbing is asked to call police Detective Brandon Richards at (408) 779-2101 or the anonymous tip line at (408) 947-STOP (7867).