The musician, born Melvin Vernell III, was shot outside Northside Hospital at around 6.40pm on Thursday night (June 7) in the 1001 block of Johnson Ferry Road, The Atlanta-Journal Constitution reports.
Vernell was taken to the hospital but was pronounced dead shortly after.
Fellow rapper and Trill Entertainment collaborator Webbie said on Twitter: "RIP TO MY LIL BROTHER PHAT! LIFE SO F**KED UP! TRILL4LIFE
"YOU STUPID BITCHES THINK DEATH A JOKE UNTIL YOU LOSE SOMEBODY YOU LOVE! #RIPLILPHAT"
Sandy Springs police reportedly said that they are looking for "two black males... seen running from the location at the time of the shooting".
Police spokesman Capt. Steve Rose added that one was tall and dressed in black and the other was short and wearing a red shirt.
Lil' Phat had a top ten single in 2008 with 'Independent', a collaboration with Webbie and Lil' Boosie.
Watch the 'Independent' music video below: