Alameda County Sheriff’s Office spokesman Ray Kelly said deputies were called to the San Lorenzo Library at 1.30pm on Saturday to reports of a disturbance.
Mr Kelly said a group of five men began to shout homophobic and transphobic slurs at the event organiser, who had been reading to children and parents.
“The men were described as extremely aggressive with a threatening violent demeanour causing people to fear for their safety,” Mr Kelly said.
The deputies de-escalated the situation before anyone was hurt, he said.
“An active hate crime investigation is underway as is an investigation into the annoying and harassing of children.”
Kyle Chu, a drag queen known professionally as Panda Dulce, wrote on Instagram that he had been hosting the event when up to 10 Proud Boys stormed the library shouting “tranny” and “paedophile.”
The disruption “totally freaked out all of the kids” and the group “attempted to escalate to violence,” he wrote.
No arrests have been made and nobody was physically harmed.
“It appears the group of men may be affiliated with the Proud Boys organisation,” said Mr Kelly, of the Alameda County Sheriff’s Office.
He said the five men involved were wearing the black and yellow colors associated with the far-right group.
Mr Kelly said deputies would ensure any future events at the library were protected from hate speech and threats of violence.
“As we celebrate Pride Month, we will be swift in our response to any incidents where there are threats to harm members of this community.”
On Saturday, 31 members of the neo-Nazi Patriot Front group were arrested in Idaho on suspicion of planning to start a riot at a Pride march.