Paramedics were called to Union Road in Ascot Vale shortly after midday on Monday but Mr Moran was dead when they arrived.
Two men wearing dark clothing and balaclavas confronted Mr Moran inside the Ascot Pasta & Deli Cafe before both men opened fire on the 60-year-old, Homicide Detective Inspector Steve Clark said.
He suffered multiple gunshot wounds to the head, an ambulance spokesman said.
"Two men fled the scene on foot, they were seen getting in a dark blue or green vehicle,'' Detective Inspector Clark said.
Police confirmed a man in his 60s had been killed, while gangland identity Mick Gatto and several locals said it was Mr Moran.
"Someone called me this morning and told me he had been shot a number of times and was dead," Mr Gatto said.
Police are on the scene and have cordoned off a section of Union Road. The gunmen drove north down Union Road and are still at large, police said.
Mr Moran is the fourth member of the clan to suffer a violent death. His brother Lewis and his nephews Jason and Mark Moran were also killed in the Melbourne's underworld war.
Judy Moran, the widow of Lewis and mother of Jason and Mark, reportedly raced, screaming, to the scene of the shooting in Ascot Vale this afternoon.
Workers on Union Road described hearing up to six gun shots.
"I heard what sounded like crackers," Susan from Baker's Delight told ninemsn.
"We had a lot of people in the shop with children, we were quite busy. When we heard the shots they all ran and jumped behind the counter and we locked the shop straight up."
An employee from the Foodworks convenience store said they shut the store as soon as the shots rang out.
"We heard the shots and as soon as they were fired everything seemed to happen in a hurry … police were here in a flash," she said.
Another worker from the NewsXpress newsagency said the gunfire made a popping sound.
"It made me turn to another worker on the counter and ask, 'was that a gun?'
"He went outside and walked up the street a couple of feet and saw the body lying in the doorway."
The newsagency worker said she saw people running outside after the shooting. "Lots of people amazed, confused and shocked that this could happen," she said.
Many stores along the shopping strip have closed for the day.
In March, Mr Moran narrowly escaped with his life after a balaclava-clad man fired a bullet through the windscreen of his car. (Watch video: 'I'm not worried one bit')
Police had a suspect at the time but no charges were laid.
A coroner's van is still at the scene with around six police cars at the busy shopping strip.
Mr Moran was known to be a regular at the Ascot Pasta and Deli Cafe where he would sit outside with friends drinking coffee.
The police are FULLY aware of these criminal's activities, AND their associates, BUT do nothing about it.
The taxation department is FULLY aware of their laundered monies, BUT do NOTHING about it..
The word within the force is so that they kill themselves.
It is a tactic employed by many a police force.
As a general rule the known associates target each other, and only when the general public get hurt, the police Public Relations department starts to kick in and make some arrests to keep the general populous content.
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