According to the superseding indictment filed, the men charged are known street gang members and both are in custody.
Authorities say the shootout was between rival gangs "Mac Block" and "Page Street."
RELATED: Police say 1 dead, 5 injured in San Francisco shooting
"This event was heinous," said San Francisco Police Department Chief William Scott.
One man was killed and five other people injured including a 27-year-old man who was paralyzed from the waist down.
"Those want to be kings of the street don't have a throne waiting for them they have a federal prison cell waiting for them," said San Francisco FBI Special Agent in Charge John Bennett.
United States Attorney David Anderson along with FBI Special Agent in Charge Bennett and San Francisco Police Department Chief Scott announced the federal superseding indictment Thursday against San Francisco residents 28-year-old Robert Manning and 26-year-old Jamare Coats.
Both men are accused of using a firearm in furtherance of a crime of violence resulting in death and being felons in possession of a firearm.
"These individuals were documented gang members and convicted felons who have a history of committing violent crimes involving the use of firearms," said Chief Scott.
The federal superseding indictment is the result of a joint effort between law enforcement partners.
"We are all safer when federal and local law enforcement is allowed to work together," said United States Attorney Anderson.
Anderson is calling for the review, assessment, and reversal of San Francisco's decision to suspend its participation in the Joint Terrorism Task Force.
"It's one of those decisions the consequences of which will only be known when it is too late to make a difference," he said.
The decision to rejoin would require Police Commission Approval.
ABC7 News reached out to Police Commission President Bob Hirsch. He submitted the following statement via email.
"I write in response to the comments made by the US Attorney for the Northern District of California regarding the SF Police Department and the FBI's Joint Terrorism Task Force. I write as President of the SF Police Commission and speak on my own behalf. The SFPD and FBI are in daily contact over public safety issues. The SFPD also participates in the NCRIC - a clearing house for public safety data and criminal activity in the region. In order for the SFPD to rejoin the JTTF, a round of meetings must be held with participation by the SFPD, FBI, Police Commission, and members of the civil rights community. Several issues have been raised in the past about immigrant and Muslim communities which must be addressed. Such meetings were held in 2016-17 and can be reinstated. Public safety remains a critical concern for the City, however it must be certain that SF Police Officers comply with Constitutional, statutory, and regulatory mandates which include a requirement that officers have reasonable suspicion of criminal activity if they participate in an investigation. So, it is not about "staying true to the values of the City," but about assuring San Franciscans that their police department is complying, and will comply, with federal and state laws as well as Department directives."
The maximum penalty for the charges announced is death. Coats is scheduled to be arraigned Friday. Manning made his initial appearance Jan. 2 in Fresno.