1. Literally, there have been gunshots. Typically used by law enforcement. Attention all units, shots fired at 1500 Oak Boulevard.
2. By extension, a humorous phrase used to acknowledge that someone has said or done something insulting or argumentative. A: "Shouldn't you nerds be studying or something?" B: "Shouldn't you be failing a career aptitude test or something?" C: "Ooh, shots fired!"