LOS ANGELES -- After nearly two decades fighting gangs, Los Angeles County Sheriff's Detective Robert Lyons thought he had seen it all. Until he saw members of the Bloods and the Crips -- rival gangs that spent years in brutal conflict -- meeting amiably in a restaurant.

"They were talking. There was hugging and high-fiving. It was unbelievable," Mr. Lyons said. He has heard a refrain from gang members: Red (the Bloods) and blue (the Crips) make green (money).

Gangs...