But the rapper's lawyer said that Knight was being beaten and threatened with his life at the time of the incident.
The rapper was held in lieu of $2 million in bail, Sergeant Diane Hecht of the Los Angeles County Sheriff's Office told AFP.
Witnesses told the sheriff's department that Knight, co-founder of Death Row Records, first argued with the men, then used a red pick-up truck to strike them, backing into one then running over both.
The argument began on the set of "Straight Outta Compton", a movie about pioneering rap group NWA, said Captain John Corina of the Sheriff's Department.
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Corina told reporters that Knight is believed to have left the set in southern Los Angeles and followed the two victims to a nearby burger shop, scene of the parking lot incident.
"We are handling it as a homicide," he told reporters at the scene.
Knight was arrested in the early hours after being interviewed by homicide detectives.
His lawyer said the rapper was attacked by a number of men, and had accidentally run over the victims while trying to escape, according to The LA Times.
"He made an effort to escape, he was in fear for his life. And that's exactly what he did," he said.
One of the victims was declared dead at the hospital. The second survived but no details on his condition were released.
Knight, 49, co-founded Death Row along with hip-hop music king Dr Dre in the early 1990s.
The label launched stars such as Snoop Dogg and Tupac Shakur but collapsed in 1996 when Knight was jailed for violating a 1992 probation order by beating up a rival in Las Vegas.