Underworld associate Michael "Mick" Hamill, 63, was stabbed outside the Woolworths store on Acland Street just after midday on Monday.

Hamill, the business partner of former bikie Toby Mitchell, was rushed to The Alfred hospital after being stabbed multiple times at the rear entrance to the supermarket on Chaucer Street, near the Peanut Farm Reserve.

An onlooker reported seeing a large pool of blood at the scene, as ambulance paramedics treated Hamill.

A police spokeswoman said the man's injuries were serious.

A source said the attack was sparked by a dispute with two men over a debt.

Detectives from the Port Phillip crime investigation unit cordoned off part of Chaucer Street, while officers searched the Peanut Farm Reserve and parkland adjoining Luna Park and the Palais Theatre. Meanwhile, forensics police dusted a white Mercedes van at the scene for fingerprints.

Police are also expected to obtain CCTV footage from surrounding shops and businesses.

Hamill, who co-owns the City of Ink tattoo parlour along with Mitchell and former AFL star Jake King, was jailed in 1997 for bashing Sam Newman in a dispute over Hamill's former girlfriend, Toorak socialite Melissa Skirton.

Mr Newman suffered a broken nose in the altercation, while Hamill was handed a four month prison sentence.

Hamill is also a partner with Mitchell in a company called TGM Consultants, which is believed to import luxury cars, motorcycles and watches.

The former plumber is an associate of several other prominent underworld figures, including Bandidos member and former kickboxer George Zakharia, who was imprisoned for robbery in the 1980s.

Monday's attack is not the first occasion Hamill has been assaulted.

More than a decade ago, he was involved in a wild brawl in Crown Casino's high-roller room with an underworld identity, whose name cannot be published for legal reasons.

Hamill was seriously injured in the fight.