According to the Atlantic County Prosecutor's Office, Dixon, 20, and three other individuals were shot at 12:30 a.m. yesterday in the parking lot of Moe's Chicken, on Adriatic Avenue.
No arrests have been made and the office would not comment on a motive.
Atlantic City residents Carlton Williams, 23, Shaheed Little, 20, and an unidentified 17-year-old male were also shot.
Little was treated at a hospital and released, but Williams and the teenager remain hospitalized, officials said.
Danielle Hunter, a spokeswoman for the state Department of Corrections, said Dixon was released from the Mountainview Youth Correctional Facility in Hunterdon County Monday morning.
Dixon had been jailed since March 14, 2008, on drug offenses and charges of eluding police and bail jumping.
The block party in the Carver Hall neighborhood was aimed at raising awareness about violence, community policing and to remember others who had died, Young said.
Ghuneem Abdullah, a manager at Moe's Chicken, said those in attendance were memorializing Marcus Earl Hayes, a city Public Works employee who was shot and killed in 2008, three months after he was released from prison.
"We were outside closing up. . . . My daughter was out there with me," he said.
"A lot of people are shaken up. To see kids lying there, it's traumatizing to see."
Tipsters can call the Atlantic County Prosecutor's Office at 609-909-7800.
